Glossary · UK
What is Gift with Reservation of Benefit (GWR)?
A gift where the donor keeps some benefit from the asset, so it stays in their estate for inheritance tax despite being given away.
Full Definition
A Gift with Reservation of Benefit (GWR) arises when you give an asset away but continue to enjoy a benefit from it, meaning HMRC still treats it as part of your estate for inheritance tax (IHT). The classic example is giving your home to your children while continuing to live there rent-free. Because you have reserved a benefit, the gift does not leave your estate even after the usual seven-year period, so the value is still taxed at 40% above your available nil-rate band (£325,000) on death, plus the residence nil-rate band (£175,000) where it applies. The rules are designed to stop people sidestepping IHT while keeping use of the asset. You can avoid GWR by paying a full market rent for any continued use, or by genuinely ceasing all benefit. If you do release the reservation later, the gift is then treated as a potentially exempt transfer from that date, restarting the seven-year clock with taper relief. Note the overlapping pre-owned assets tax (POAT) income charge can apply where GWR does not. IHT is UK-wide, so the same rules apply identically in Scotland, Wales and Northern Ireland; only land taxes (LBTT, LTT, SDLT) differ.