The following Trusts and Inheritance Tax guidance note Produced by Tolley in association with Charlotte Kynaston provides comprehensive and up to date tax information covering:
The family home is often the largest asset in the estate and is frequently an obstacle toeffective estate planning.
The simplest approach is usually for the client tosell their home and downsize toa smaller property. They can make use of principal private residence relief for capital gains tax and release funds tomake potentially exempt transfers (PETs) for IHT purposes. See the Outright gifts guidance note.
However, many clients want toremain living in their home until their death. In this case, it will be difficult togive away the home without getting caught by the gift with reservation (GWR) of benefit provisions or the pre-owned asset tax (POAT). During the 1990s and early 2000s, a number of schemes and arrangements were devised toavoid these provisions and still remain living in the home.
See the Gifts with reservation ― overview and Pre-owned assets tax guidance notes.
The introduction of the transferable nil rate band in 2007 rendered such planning for lower value estates less important. Planning will become even less relevant with the introduction of the residence nil rate band for residential interests in estates worth not significantly more than £2m. See the Nil rate band and the Residence nil rate band ― main provisions guidance notes.
Nevertheless, tax practitioners will still encounter schemes 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.
This note examines two schemes which sought togive away an interest in the family home while remaining in occupation of it. They made use of the fact that it is possible tohave a number of distinct legal interests in one physical property. The client would give away an interest in their home, reducing the value in their estate for IHT purposes, while retaining an interest which allowed them tocontinue living in it.
Ingram schemes are so called because they were considered
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