S102(B)4 - GROB and exception

The scenario is son moves in and lives with elderly mother to care for her during the pandemic. Son has until that point been living with his wife and young family a few miles away in a home they own. Son is likely to remain caring for an increasingly frail mother. He is happily married and as lockdown eases his wife and family will come and go between both houses as will he, although he is likely to spend more time with mother, if not every night. If mother gifts a share in her property to her son does the exception to GROB rules apply? Of course mother may not survive 7 years and there are CGT implications for son.

Even if she gifts a share of her main residence to her son she will, as I understand the HMRC rules, have to survive 7 years for full exemption from IHT.
Portfolio Counselling Services Limited.

Various articles in Tax Adviser suggest that Residence Nil Rate applies on donor’s death if part of property gifted outright, while donor continued to reside there - reservation of benefit to donor- so value of gift with reservation (GROB) will form part of donor’s estate. I’d check all relevant parts of section 8 IHTA 1984 including 8FE before advising client

IHTA 1984 s102B(4) should provide mother with protection from a reservation of benefit wrt the gifted portion to son.

On the facts, the son will occupy the property with mother. The fact that son’s residence for CGT is the “family home” does not preclude occupation of mother’s home with mother.

Assuming no reservation of benefit in the % gifted by mother to son, Mother’s RNRB on her death will include the % of her home she retains beneficially until death. Wrt the balancing % mother gifts to son in lifetime the downsizing relief provisions should apply.

Malcolm Finney

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