Trusts and Inheritance Tax

Historical schemes: Eversden, home loan and family debt schemes

Produced by Tolley
  • 21 Dec 2021 16:32

The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Historical schemes: Eversden, home loan and family debt schemes
  • Eversden schemes
  • Countering legislation and current status
  • Unravelling the schemes
  • Home loan or double trust schemes
  • Countering legislation and current status
  • Unravelling the schemes
  • Family debt schemes
  • Current status
  • Unravelling the schemes

Historical schemes: Eversden, home loan and family debt schemes

This guidance note considers some IHT planning schemes which were popular in the 1990s and early 2000s as a means of removing the value of the home from the taxpayer’s estate. The aim was to allow the property owner to remain living in the home without getting caught by the gift with reservation (GWR) provisions. They are now largely unworkable or unnecessary as a result of subsequent legislation.

See the Gifts with reservation ― overview guidance note.

Although the schemes are no longer recommended, tax practitioners will still encounter arrangements which were set up years ago. The guidance notes on historical schemes provide some background information on how the schemes worked and what their current status is.

See also the Historical schemes: Ingram and reversionary lease schemes guidance note.

Eversden schemes

These schemes involved the transfer of a property from one spouse to a life interest trust to the other, the terms of which provided that the first spouse was also a discretionary beneficiary on the death of the second spouse. They took advantage of:

  1. the general spouse exemption

  2. the fact that a lifetime gift into trust could (before 22 March 2006) create an interest in possession by which the holder of that interest was deemed to own the underlying capital, and

  3. the specific exemption from the GWR provisions which applied to transfers between spouses

IHTA 1984, ss 18, 49; FA 1986, s 102(5)(a)

In Eversden, a married woman transferred a 95% interest in a house to a

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information

LEARN MORE LEARN MORE

Popular Articles

What is input tax?

This guidance note provides an overview of what conditions need to be met before a business is entitled to treat VAT incurred as input tax. This note should be read in conjunction with the other notes in the ‘Claiming input tax’ subtopic. For a flowchart outlining the procedure for claiming input

19 Oct 2021 22:57 | Produced by Tolley Read more Read more

Qualifying loan interest

Interest paid on qualifying loans is deducted from the taxpayer’s total income (ie a Step 2 deduction from total income). See the Proforma income tax calculation guidance note.Interest on qualifying loans is usually paid gross by the individual borrower; tax is not withheld at source. This includes

17 Nov 2021 12:07 | Produced by Tolley Read more Read more

Loan notes and qualifying corporate bonds (QCBs) and non-QCBs

On the disposal of the shares in a company, a seller may receive loan stock in the acquiring company as consideration or part consideration for the sale. For tax purposes, loan notes are either qualifying corporate bonds (QCBs) or non-QCBs (NQCBs). The expression ‘corporate bond’ is a general

21 Dec 2021 16:32 | Produced by Tolley Read more Read more