POAT at bay

It has been put to us that since the introduction of pre-owned asset tax for anyone who made a disposition of property prior to 5 April 2005 and — at its simplest — continues to reside in it it is essential from that date to pay a market rent to avoid the gifts of reservation rules coming in.

In other words accepting the income tax charge on the appropriate rental value will not do the trick and keep the property out of the donor's estate.

Do readers agree please?

Furthermore we have another situation where a prospective donor plans to give away the whole house but continue to live in a separate flat within it occupying perhaps one third of the floor area.

If a market rent is paid to the donee for the use of this flat will the whole gift be...