Court of Appeal decision on home loan inheritance tax double trust scheme

The Court of Appeal has given judgment in the appeal of HMRC v Elborne [2026] EWCA Civ 894 in which HMRC was appealing against the earlier decision of the Upper Tribunal (Tax and Chancery Chamber) [2025] UKUT 59 (TCC). The case concerns whether or not a home loan inheritance tax double trust scheme designed to remove the value of a freehold interest in real property from an individual’s inheritance tax estate whilst at the same time enabling the individual in question to continue to live in the property rent-free achieves its intended effect. At first instance, the First-tier Tribunal ([2023] UKFTT 626 (TC)) had held that on the proper construction of the applicable legislation, including section 103 of the Finance Act 1986, which deals with the treatment of certain debts, the scheme failed to achieve its intended effect, in line with the First-tier Tribunal’s earlier decision in Pride v HMRC [2023] UKFTT 00316 (TC). The Upper Tribunal overturned the First-tier Tribunal’s decision holding the scheme to be effective. The Court of Appeal has upheld the Upper Tribunal’s decision.

Jonathan Davey KC acts for the appellants along with Barbara Belgrano of Pump Court Tax Chambers. Charles Bradley of Pump Court Tax Chambers acts for the respondents.

Read the full judgment