Answers · UK 2025/26
What is a gift with reservation of benefit for IHT?
A gift with reservation (GWR) is where you give away an asset but continue to enjoy it. The asset remains in your estate for IHT purposes.
Full answer
Under IHTA 1984 s102, if you make a gift but retain a benefit from the asset (for example, you give your house to your children but continue living in it rent-free), the gift fails for IHT purposes and the property remains in your taxable estate on death. To avoid GWR, you would need to pay full market rent (or vacate). If you previously made a GWR gift and the reservation is released within 7 years before death, the gift becomes a potentially exempt transfer (PET) starting from when the reservation ended. Pre-Owned Asset Tax (POAT) also applies where someone has enjoyed an asset they previously owned without paying market rent.
This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.