Glossary · UK
What is Gift with Reservation of Benefit?
A gift where the donor keeps a benefit from the asset, so it remains in their estate for Inheritance Tax despite being given away.
Full Definition
A Gift with Reservation of Benefit (GWR or GROB) is an anti-avoidance rule that prevents people from giving assets away to reduce Inheritance Tax while continuing to enjoy them. If a donor gives an asset away but reserves a benefit, for example transferring their house to their children but continuing to live in it rent-free, the asset is still treated as part of the donor estate on death and taxed at 40% above the available nil-rate bands, even though the gift may have been made many years earlier. The rule applies where possession is not genuinely given up, or where the donor retains or later obtains a benefit. There are exceptions, including where the donor pays a full market rent for continued use, or where they share occupation and bear their share of costs. A GWR can produce a double charge if the gift is also a failed potentially exempt transfer, though regulations prevent tax being charged twice on the same value. A related provision, the Pre-Owned Asset Tax, can impose an annual Income Tax charge where the GWR rules do not bite. Careful structuring and full market rent are the usual ways to avoid an unintended reservation.