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By Mark McLaughlin, June 2021

Mark McLaughlin highlights a case on an inheritance tax scheme involving the family home.  

It is difficult to think of a tax avoidance scheme more strongly disliked by HM Revenue and Customs (HMRC) than the ‘home loan’ (sometimes referred to as the ‘IOU’) scheme for inheritance tax (IHT) purposes. 

What is it?  

The home loan scheme reached the peak of its popularity in the late 1990s and early 2000s. Broadly, the scheme typically involved the homeowner (e.g. Mr X) selling their residence to a trust (i.e. a life interest trust for them) for full market value. The trustees would give Mr X an IOU for the purchase price. Mr X would then give the IOU to a life interest trust for (say) their adult children. Mr X would continue occupying the

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