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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Gifts with reservation: Notional transfer

For the purpose of deciding whether the asset qualifies for business relief on the notional transfer by the donee at the time of the GWR charge

  • treat any period of ownership by the donor prior to the gift as ownership by the donee for the purposes of the ownership test (IHTM25301), FA86/SCH20/para8 (2) (a) , and
  • if the donee dies before the time of the GWR charge, for the period after the donee’s death treat the donee’s personal representatives or beneficiaries of the GWR property as the donee, FA86/SCH20/para8

Note that if the GWR charge arises on the release of the reservation, the transferor is treated as making a PET (IHTM04057) and the additional conditions for lifetime transfers (IHTM25361) will also need to be satisfied at the date of death.