I included my children in the deed of my main house seven years ago. It is jointly held. My children and I moved out shortly after this, and the house was rented out in April 2016. My question is whether we all must split the rent and associated costs since 2016 for the children to be exempt from IHT. Can I backdate the income and expenditure to them? I paid full tax on all income and expenses on that property. 

Arthur Weller replies:  

If you included your children in the deeds of your house, I presume that you mean that you transferred part of the property to them. This would have been effective for inheritance tax (IHT) purposes so that after seven years, that part of the house that you transferred is not included in your estate. However, HMRC would argue that this is a gift with reservation (GWR) because after the gift you have continued to benefit from what you have given away, since it appears that you have received 100% of the rental income from the property since the transfer. See HMRC’s Inheritance Tax Manual at IHTM14332, Example 4 (www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14332). I can't see how it is possible to backdate the income and expenditure to your children.