Upper Tribunal decision on home loan inheritance tax double trust scheme

The Upper Tribunal (Tax and Chancery Chamber) has given judgment in the appeal of Elborne v HMRC [2025] UKUT 59 (TCC), in which the Elborne estate and trustees of the Elborne settlements were appealing against the earlier decision of the First-tier Tribunal (Tax Chamber) [2023] UKFTT 626 (TC). 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 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 has overturned the First-tier Tribunal’s decision holding the scheme to be effective. The case 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 acts for the respondents along with Barbara Belgrano of Pump Court Tax Chambers. Charles Bradley of Pump Court Tax Chambers acts for the appellants.

Read the full judgment