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Where a donor has made a gift of property and continues to use or benefit (or may benefit) from that property in some way, he may have made a gift with reservation of benefit for inheritance tax (IHT) purposes.

However, this will not be the case where:

1. •

   a donor makes a gift of cash and the donee uses the money to buy an asset which the donor then enjoys

2. •

   sophisticated planning arrangements ensure that the property that the donor enjoys is not the subject matter of his gift

In these cases, the donor may fall within the special annual charge to income tax, known as pre-owned assets tax (known variously as POAT, the POA charge or POA rules). This is a tax on assets they previously owned or assets whose acquisition they financed since 17 March 1986. The charge was introduced by FA 2004 and was effective from 6 April 2005 (the start of the first tax year in which the charge could arise).

The assets that are specifically targeted