Gift with reservation of benefit (GWR or GROB) meaning

STOP PRESS: At the 2025 Budget, the government confirmed plans to legislate against IHT avoidance that exploits the situs of personal assets and trust property. A key proposal expands rules on indirect holdings of UK residential property to capture UK agricultural property. For further detail, see: Budget 2025—Private Client analysis — International and Policy Paper: Inheritance Tax: anti-avoidance measures for non-long-term UK residents and trusts. This Practice Note outlines amendments to the excluded property rules from 6 April 2017 introduced by the Finance (No 2) Act 2017 (F(No 2)A 2017). As a result, UK inheritance tax (IHT) is charged on UK residential property owned by (or on behalf of) a long-term UK resident (LTR), whether held directly or via intermediate structures, unless the interest is through a diversely held vehicle. Before 6 April 2025, when domicile stopped being a relevant consideration for IHT, these provisions applied to individuals who were not domiciled, or were deemed domiciled, in the UK. For guidance on how domicile affected IHT, see Practice Note:...

Private Client England & Wales glossary A Abatement When, after settling the deceased’s funeral costs, debts and liabilities, the remaining estate cannot satisfy all legacies in full, the gifts are reduced accordingly, unless the Will shows a different intention. In a solvent estate, the order for reduction appears in Part II of Schedule 1 to the Administration of Estates Act 1925. Refer to Practice Note: Payment of legacies. Accruals basis Where income is taxed on an accruals basis, it is attributed to a given tax year by reference to the number of days within that year during which the activity giving rise to the liability accrued. See Practice Note: What is the basis of income tax?. Accumulation and maintenance (A&M) trust A form of non‑interest in possession trust designed to benefit children and young people up to 25, which received favourable inheritance tax treatment between 1975 and 2006. See Practice Note: Accumulation and maintenance trusts—IHT [Archived]. Accredited Legal Representative (ALR) ...

Introduction The principal legislation in the Inheritance Tax Act 1984 (IHTA 1984) and the earlier capital transfer tax system left a gap. Nothing stopped a person aiming to limit inheritance tax (IHT) on death from making a lifetime transfer (hoping to live at least seven years thereafter) yet keeping the use or enjoyment of what was given. As a result, under those rules, someone could, in effect, divest their home for IHT purposes while still living in it. Section 102 and Schedule 20 to the Finance Act 1986 (FA 1986) introduced the gift with reservation of benefit (GWR or GROB) rules to shut this loophole. When the GROB rules bite, the gifted asset (or, in some circumstances, a replacement) is generally treated as remaining within the donor’s estate for IHT while the donor continues to benefit. The rules can apply where, among other conditions, a person makes a gift of property on or after 18 March 1986 which is not then enjoyed to their entire, or virtually entire, exclusion....