Chris Thorpe outlines some of the issues surrounding deducting loans for inheritance tax purposes.
Within a death estate and an IHT400 account, the value of liabilities can generally be deducted when calculating the IHT liability (under IHTA 1984, s 5(5)).
Debts which are allowable for inheritance tax (IHT) purposes have to be either debts imposed by law (tax being the most common, but also local taxes such as council tax, and fines), or debts which the deceased purchased for money or money’s worth. One criterion is that the debts must be legally enforceable (unless statute-barred, including student loans) – they cannot be loans which might only be morally
