Is this situation a gift with reservation

[Taxed to the hilt]

Parents gift a property to themselves and their son as joint tenants via a deed and parents pay all the household living expenses.

The son lives with the parents both before and at the time of the gift.

6 years after the gift the son decides to move out of the property and the parents do not pay the son a full market rent for his one third share of the property.

The parents both die more than 7 years after the gift.

When the father dies the house passes to the mother and son under the survivorship rules as it is held as joint tenants so there is a gift with reservation.

Is there a gift with reservation when the mother dies as before the gift she owned 3/6 of the house and after the gift they all the joint owners held 2/6 each but when the father died the mother owns 3/6 and the son owns 3/6 which is the same proportion for the mother as before the gift.

[maths]

Parents gift a property to themselves and their son as joint tenants via a deed and parents pay all the household living expenses.
The son lives with the parents both before and at the time of the gift.

It is of course not possible to make a gift to oneself. If the beneficial interest is held as joint tenants then the consequence of the gifts to their son is that the joint tenancy is severed converting mum and dad's beneficial interests into a tenancy in common (each parent giving 1/6th each). Assuming mum and dad hold the legal title, then post the gifts to son they then hold the legal title as may be specified under any declaration of trust for themselves and their son. I would suggest that subject to the content of the declaration, each holds as a tenant in common (not as a joint tenant).

Assuming that the parents post gift do not receive any benefit (i.e. son does not pay for all the household expenses or more than his fair share thereof) no reservation arises at this time. The gifts are simple PETs.

6 years after the gift the son decides to move out of the property and the parents do not pay the son a full market rent for his one third share of the property.

A gift with reservation applies at this time.

On the death of father his estate should include the 1/6th interest he gave to son.

On subsequent death of mother her estate should include the 1/6th she gave to son.

No other gifts to son were made in lifetime only via a will (a deceased via a will cannot be regarded as making a gift with reservation).

[When the father dies the house passes to the mother and son under the survivorship rules as it is held as joint tenants so there is a gift with reservation.
No; see above]

[Taxed to the hilt]

Hi Maths many thanks for responding to my query

You wrote:

"It is of course not possible to make a gift to oneself. If the beneficial interest is held as joint tenants then the consequence of the gifts to their son is that the joint tenancy is severed converting mum and dad's beneficial interests into a tenancy in common (each parent giving 1/6th each). Assuming mum and dad hold the legal title, then post the gifts to son they then hold the legal title as may be specified under any declaration of trust for themselves and their son. I would suggest that subject to the content of the declaration, each holds as a tenant in common (not as a joint tenant)".

The deed that transferred ownership of the property stated the following which is why I said that they gifted the property to themselves and to the son as joint tenants :

"In consideration of my natural love and affection we transfer the property comprised in the title above to ourselves and to our son as joint tenants"

I do not know if the property was held by the parents as joint tenants or tenants in common before the transfer to the son but after the transfer it was held as joint tenants as the solicitor stated that the advantage of holding the property as joint tenants is that ownership of the property passes to the survivors with out the need for a will.

You wrote:

"On the death of father his estate should include the 1/6th interest he gave to son.

On subsequent death of mother her estate should include the 1/6th she gave to son".

Does the above apply whether the property is held under a joint tenancy or tenants in common?

[maths]

"On the death of father his estate should include the 1/6th interest he gave to son.

On subsequent death of mother her estate should include the 1/6th she gave to son".

Does the above apply whether the property is held under a joint tenancy or tenants in common?

Yes. Each joint tenant owns the same share. For IHT if there are three joint tenants they are each treated as owning a 1/3rd share.

Others may take a different view as the IHT exposure.