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IHTM44046 | Pre-owned assets: exemptions: reservation of benefit in property but for certain exemptions

From HM Revenue & Customs · Inheritance Tax Manual

The reservation of benefit provisions do not apply to disposals by way of gift that are exempt from Inheritance Tax (). FA04/Sch15/Para11(5)(b) provides that the POA charge does not apply where property would be subject to a reservation of benefit () but for the following exemptions

  • gifts to charities (),

  • gifts to political parties (),

  • gifts to housing associations (),

  • gifts for national purposes (),

  • maintenance funds for historic houses (), and

  • employee trusts.

Note that where the disposal is to a maintenance fund, the POA charge is only disapplied when the property remains subject to the trusts complying with the requirements for maintenance funds, FA04/Sch15/Para11(10).

Note also that a gift to a spouse or civil partner which is exempt from the reservation of benefit provisions (), is not exempt under this provision, but is instead an excluded transaction under FA04/Sch15/Para10(1)(b) ().