Pescara requires advice on the inheritance tax payable on death and on the gift of a property, a

Pescara:
– Pescara is a higher rate taxpayer who is resident, ordinarily resident and domiciled in the UK.

Pescara – gift of a UK property:
– Pescara intends to give a UK property to her son on 1 October 2014.
– Pescara intends to continue to use this property, rent-free, such that this gift will be a gift with reservation.

Required:
(c) Explain how the proposed gift of the UK property will be treated for the purposes of calculating the inheritance tax due on Pescara’s death. (4 marks)