20 August 2026
As an increasing number of estates fall under consideration for Inheritance Tax (IHT), more individuals need to consider the most effective way of structuring their estate.
These considerations must also reflect measures that have been taken in the past and could still be affecting your estate.
A recent ruling may be the catalyst for many to reconsider how their estates are currently structured, so it is worth understanding whether you are likely to be impacted.
The Court of Appeal ruling
The case of HMRC v Elborne [2026] EWCA Civ 894 recently concluded and brought with it some much-needed clarity on how legacy IHT plans are considered under the current regulations.
Centred around a home loan scheme that was established in 2003, Ms Elborne aimed to remove her £1.8 million house from her estate for IHT purposes.
For those who see the appeal of having what is likely the highest value aspect of the estate removed entirely, it may be disheartening to discover that such measures were rendered illegal under anti-avoidance laws as per the Finance Act 2013.
It has broadly been assumed that such measures were retroactive in application and there has been little cause to contest HMRC’s assertion of this fact as legal costs typically outweigh the contested value.
However, the recent case saw £700,000 in question, with its inclusion in the IHT bill dependent on the property being a valid part of the estate.
The scheme enabled Ms Elborn to sell the property into a trust for her children and receive a loan note that was then itself given to a second trust, which also stood to benefit her children.
Having set up the system of trusts in 2003, Ms Elborne’s death in 2011 placed the manoeuvre firmly outside of scope for IHT due to the seven-year rule around gifts.
The Court of Appeal rejected HMRC’s insistence on considering the property as part of the estate, noting that Ms Elborne had succeeded in implementing an ingenious scheme even if such a scheme would no longer be possible.
How will the ruling affect estate planning?
While the ruling is unlikely to kick open the door to a wave of IHT reductions, it does highlight the need to have a comprehensive knowledge of the system and how your own estate is structured.
Anti-avoidance legislation must be adhered to at all times, but the presence of historic schemes and measures could still be valid if they were established prior to the enactment of the Finance Act.
More broadly, the ruling should inspire those who are concerned about their IHT exposure to seek professional advice.
While we may not be able to remove your entire property from your estate, our expert team can support you in mitigating your IHT exposure.
We can assess the value of your estate and highlight areas that can be adjusted to reduce your IHT bill.
As highlighted in the case, gifting remains a powerful way of mitigating IHT, but only when used properly.
If you want expert support with managing your Inheritance Tax, get in touch with our team today.