Overview

The England and Wales Court of Appeal’s decision in Elborne v HMRC [2026] EWCA Civ 894 has confirmed that the inheritance tax (IHT) planning arrangement, commonly referred to as a ‘home loan’ or ’double trust’ scheme, succeeded on its specific facts. The Court unanimously dismissed HMRC’s appeal, concluding that the statutory provisions relied upon by HMRC did not bring the value of the deceased’s home back into her estate for IHT purposes.

Although the judgment represents a significant defeat for HMRC, practitioners should be cautious about drawing wider conclusions. The decision relates to arrangements implemented in 2003, under legislation as it then stood. It should not be interpreted as reviving historic inheritance tax avoidance planning.

The facts

The arrangements involved the:

• sale of the deceased’s home to trustees of a life interest settlement in return for an interest-free promissory note;
• gift of that promissory note into a separate discretionary trust for family members; and
• deceased continuing to occupy the property until death.

HMRC argued that the arrangements were ineffective and that the value of the property remained chargeable to IHT. The Court rejected those arguments, finding that the legislation did not produce the result HMRC contended for.

What did the Court decide?

The Court concluded that the:

• statutory provisions governing gifts with reservation and associated anti-avoidance measures did not apply in the manner argued by HMRC;
• legislation should be interpreted according to its wording rather than by reference to a broader policy objective; and
• arrangements achieved the intended IHT outcome under the law applicable at the time.

The judgment emphasises that anti-avoidance legislation must be applied according to its terms. It is not sufficient that an arrangement appears to frustrate the policy behind the legislation if parliament has not legislated to achieve that result.

What does this mean in practice?

The decision is likely to be relevant only to a limited number of historic estates and trust arrangements.

Practitioners dealing with existing home loan structures should:

• review whether the facts closely resemble those considered in Elborne;
• consider whether any assessments or ongoing disputes with HMRC may be affected;
• obtain specialist tax advice before taking any procedural steps; and
• be mindful of any applicable limitation periods.

Each case will depend on its own facts and legal documentation.

Does this mean these schemes are available today?

No. The arrangements considered by the Court were entered into more than 20 years ago under the legislation then in force. Since that time:

• IHT legislation has evolved;
• the General Anti-Abuse Rule (GAAR) has been introduced;
• targeted anti-avoidance provisions have expanded; and
• HMRC’s approach to tax avoidance has become significantly more robust.

Practitioners should not regard Elborne as endorsing the use of comparable planning today. Whether any modern arrangement would be effective will depend upon current legislation and the specific facts.

Practical points for STEP members

STEP members should continue to:

• advise clients based on current law rather than historic planning techniques;
• avoid suggesting that Elborne creates new planning opportunities;
• review existing trust structures where relevant; and
• ensure that clients understand the distinction between historic arrangements upheld by the courts and planning that would be appropriate under today’s legislative framework.

Key takeaway

The Court has confirmed that the particular home loan arrangement before it worked under the legislation applicable at the time. However, the decision is highly fact-specific and should not be viewed as reopening historic IHT planning or as authority for implementing similar arrangements today. Practitioners should continue to advise clients by reference to current legislation and established professional standards.

It remains to be seen whether HMRC will seek permission to appeal to the UK Supreme Court or whether the government will consider legislative change in response to the decision. STEP will continue to monitor developments and any future HMRC guidance.

Read the STEP UK News Digest story on the ruling here

Emily Deane TEP, Technical Counsel and Head of Government Affairs, STEP