Summary
The grant by an individual to her sons of a sub-lease of premises out of a head lease interest was held to be a gift with reservation of benefit (under FA 1986, s 102), which therefore fell to be treated as part of the deceased’s estate on death for inheritance tax (IHT) purposes.
Background
At her death, the deceased (LH) was entitled to the head lease of a property in London dated 21 September 1979, which expired in December 2076. A sub-lease was granted in June 1997, by which the property was sub-let for a term of years commencing on 25 March 2012, and expiring on 22 December 2076.
The sub-lease was subject to the same terms, covenants, provisos and conditions as were contained in the head lease. LH (as sub-lessor) and her three sons (as sub-lessees) respectively covenanted to perform and observe those provisions as if they
