Inheritance tax – Eversden blocked

• Finance Act 1986, Section 102 and Schedule 20, contains special rules on the taxation of lifetime gifts were the person making the gift (the donor) reserves or receives any material benefit from the gifted asset. These rules are intended to prevent the avoidance of the IHT charge on death through a lifetime gift aimed at reducing the value of the donor’s estate for the purposes of the tax without the donor having to give up enjoyment of the asset concerned. In its recent decision in the case of CIR v Eversden (2003) EWCA Civ 668 and (2003) STC 822 the Court of Appeal held that these special rules do not work when gifts by a married person are routed through a trust for their spouse.