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Tax, Property, Trusts, probate and estates: contentiousTuesday 12 September 2023

Tax Tribunal’s latest decision on home loan inheritance tax schemes

The First-tier Tax Tribunal has given judgment in the case of Elborne v HMRC [2023] UKFTT 626 (TC). The case concerns whether or not a home loan inheritance tax 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. The Tribunal found 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 and incumbrances, the scheme failed to achieve its intended effect. The Tribunal’s conclusion, which is in line with its decision of earlier this year in the case of Pride v HMRC [2023] UKFTT 00316 (TC), is of wide importance given the use of home loan inheritance tax schemes in relation to real property over several years up and down the country.

Jonathan Davey KC acted for the successful respondents along with Barbara Belgrano of Pump Court Tax Chambers.

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