This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our privacy notice.

Home-a-loan

By Mark McLaughlin, June 2020

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

It is difficult to think of a 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 was 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 his residence to a trust (i.e. a life interest trust for him) for full market value. The trustees would give Mr X an IOU for the purchase price. Mr X would give the IOU to a life interest trust for (say) his adult children. Mr X would continue occupying the house by reason of his life interest under the first trust. 

The IHT consequences were intended to be that on Mr X’s death his

This is one of our 1841 Premium articles

To see this article in full and unlock access to our complete library of 1841 articles click 'subscribe & unlock' below:
SUBSCRIBE & UNLOCK

Subscriptions include a 14 day free trial
+ money back satisfaction guarantee

Begin your tax saving journey today

Each month our tax experts reveal FREE tax strategies to help minimise your taxes.

To get Tax Insider tips and updates delivered to your inbox every month simply enter your name and email address below:

Thank you for signing up to hear from us!