HMRC thwarts inheritance tax home loan scheme
An attempt to reduce inheritance tax using a home loan scheme faced legal challenges. In a case in July 2023, the issue was whether a property's value should be counted in an individual's estate for inheritance tax purposes.
The main question revolved around whether the property's value should be included in the estate, considering a life interest and an outstanding loan. The tax authority (HMRC) aimed to tax both the property's value and the loan as debt owed to the estate.
The tribunal made several key determinations, including the validity of the sale agreement and scheme documents. Ultimately, how the property was owned and the loan's value played a crucial role in calculating the inheritance tax. While this decision doesn't set a precedent, it underscores the importance of clear tax disclosures when using such schemes.
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