IHTM11177 | Exclusions from exemption: interest reserved or created - land or buildings

From HM Revenue & Customs · Inheritance Tax Manual

Section provides that a gift to charity () is not exempt if

  • the property given is land or a building, and

  • it is given subject to an interest reserved or created by the donor which enables:

    • the donor,

    • their spouse or civil partner (),or

    • a person connected with them

to possess or occupy the land for less than a full arm’s length rent. Whether property is given subject to an interest must be established twelve months after the transfer.

A gift of land or a building will still be exempt if the reserved interest is:

  • an interest of any kind at a full arm’s length rent, or

  • an interest rent-free or at less than a full arm’s length rent

    • which is created in favour of a non-connected person (), or

    • which (as with a right of way or other easement, or fishing or shooting rights) does not confer a right to possession or occupation of any of the property

You should discuss the case with Technical before pursuing any tax.