Gift with reservation of benefit issues

Gifts with a reservation of benefit (GROBs) are a notorious pitfall for people seeking to reduce their taxable estates on death.

For many taxpayers the bulk of the value of their estates may be comprised in a small number of assets such as land or personal belongings. Gifting these assets can therefore seem an attractive route to reducing the size of the taxable estate for inheritance tax purposes in turn reducing the liability to IHT on death – as long as the donor survives seven years after making the gift(s).

It is in such circumstances that the reservation of benefit regime may come into play. The purpose of the current regime is to prevent a donor retaining their gifted assets in all but name. In other words if a donor purports to give away property to another but in reality continues to use and...