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Tax Planning and the Family Home

Ingram v IRC

1 November 1994

Ingram v IRC

Tax planning involving the family home, when the family home is the main asset, is a tricky business. If the plan is to transfer the value in the property whilst continuing to live there, the tax planner has the choice of entering into complex ownership structures, which run the risk of being disregarded by the Inland Revenue as artificial, or paying a full rent to his or her children which is not a satisfactory solution for many people.

The difficulty with tax planning using the family home arises from the fact that where property has been given away by the would-be tax planner but he or she reserves a benefit in it, typically by continuing to live in the property, the Inland Revenue will charge inheritance tax on his or her death as if the property had never been given away. Section 102(1) of the Finance Act 1986 provides that property is subject to a reservation if:

a) "possession and enjoyment of the property i...

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