In the realm of inheritance tax planning in the UK, understanding “Gifts with Reservation of Benefit” (GROB) is essential, particularly for families in South West London or Putney. This rule can often be misunderstood, especially when property owners wish to gift property while retaining personal use. As a Putney inheritance tax consultant with expertise in GROB rules and estate planning, I help clients navigate these complexities.
Let’s dive into what GROB means, when it applies, and how it might affect your inheritance tax liability.
Gifts with Reservation of Benefit (GROB) is an arrangement where an asset, like a property, is gifted to a family member, but the donor retains some benefit from it. HMRC closely monitors GROB arrangements to prevent inheritance tax avoidance. If a GROB applies, the gifted asset remains in the donor’s estate, increasing potential inheritance tax implications.
Examples of GROB include:
Understanding GROB is crucial for effective inheritance tax planning, especially for clients in South West London or Putney estate and inheritance tax planning clients. Here are the primary considerations:
Consider a typical scenario: A parent gifts their Putney home to their child but continues to live there without paying rent. According to GROB rules, the property’s value would remain in the parent’s estate, potentially increasing inheritance tax liability.
To avoid this, the parent would need to pay market rent, making the arrangement commercially fair and effectively removing the asset from their estate after seven years. For help structuring such arrangements, consult a Putney-based tax advisor for families or an expert tax advisor in South West London for guidance.
For further insights into inheritance tax and rent-free arrangements, see our blog Do You Need to Charge Rent to Family to Avoid Inheritance Tax? Read it here.
To explore how gifting property might impact capital gains tax and GROB, check out our next post, Capital Gains Tax When Selling a Family Property. Click here to continue reading.
Effectively managing inheritance tax and understanding GROB is essential for securing your family’s financial future. At Lanop Business & Tax Advisors, we provide personal inheritance tax advice for families in Putney and surrounding areas, ensuring that our clients benefit from expert planning and tailored strategies.
If you’re searching for inheritance tax planning services near Putney or local inheritance tax advisors to guide you through these complex rules, get in touch. We’re here to help families plan tax-efficiently, offering peace of mind for your estate planning needs.
Aurangzaib Chawla is a UK-based tax advisor and Managing Partner at Lanop Business & Tax Advisors. With nearly two decades of experience, he supports individuals, landlords, and SMEs with proactive tax planning and compliance. Known for simplifying complex tax legislation, Zaib helps clients minimise liabilities while building sustainable, tax-efficient strategies for long-term success.
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At Lanop, I am providing my services as the Managing Partner and Tax Specialist. My expertise includes helping medium and small-scale businesses in their accountancy and legal requirements, business start-up support, strategic review, payroll system review and implementation, VAT and tax compliance to cloud accounting. I am also an expert in financial reporting, identifying and monitoring risks, strategic business development, client retention, market acquisition and deals closure by carefully planning my sales cycle.
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