Jurisdiction(s):
United Kingdom

Gifts with reservation in undivided shares: does FA 1986 s102B(3) permit a donor to retain rents? Income tax liability under ITTOIA 2005 s271

Published on: 19 June 2024

Published by a LexisNexis Private Client expert

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Article summary

See Q&A: Mother and son own a buy to let property 50:50

The rents are split in line with ownership. The mother plans to transfer 25% of her holding to her son, keeping the remaining 25% herself. After the gift, she still intends to receive 50% of the rental income. Although this might look like a gift with reservation of benefit (GROB), it is thought that the carve-out in section 102B(3) of the Finance Act 1986 applies because:

she parts with only a fractional share rather than her entire interest; and
she does not live in or otherwise occupy the property.

Is that analysis correct...

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