Readers’ forum: Capital value

I am looking at a situation where my client is making a gift of an undivided share in a property.

The intention is that he will not occupy the property but will retain the rental income from it.

Therefore the capital value of the property will pass to the donee but not the rents.

This might be thought of as a gift with reservation of benefit. However I am comfortable that FA 1986 s 102B(3)(a) takes this situation out of the reservation of benefit rules.

There is also a similar provision taking this out of the pre-owned assets tax (POAT) provisions.

I do not think that my client has an inheritance tax issue here but I am more concerned about the capital gains tax implications. Presumably the retention of an income stream has a capital value and so will affect the allocation of...