Across the country, home and office files may be hiding paperwork that families have ignored for years. The Court of Appeal has just handed down a decision that means it’s time to dig it out. On 13 July 2026, the Court of Appeal dismissed HMRC’s appeal in Elborne v HMRC, the long-running dispute over whether ‘double trust home loan’ schemes could reduce inheritance tax on a family home while the owner still lived there. After more than twenty years of HMRC challenging these arrangements, the courts have found that the planning worked.
What was a ‘double trust home loan’ scheme?
How the scheme worked
In the late 1990s and early 2000s, these schemes were hugely popular with homeowners looking to pass on more of their wealth. The idea was elegant, if elaborate. In Mrs Elborne’s case, she sold her £1.8 million home to a trust for her own benefit. Instead of paying cash, the trust gave her a form of IOU for the price. Mrs Elborne then gave the benefit of the IOU debt to a second trust, this time for her children. She stayed in her home, rent-free, for the rest of her life.
The seven-year rule and debt deduction
Because Mrs Elborne survived more than seven years after giving away the IOU, her gift no longer counted towards the tax bill, while the debt owed to the second trust reduced the value of her home. The result: much less inheritance tax on the family home.
Fifteen years of courtroom battles
HMRC has always regarded this planning as aggressive tax avoidance, and when Mrs Elborne died in 2011 it demanded nearly £700,000 in inheritance tax. The first court to hear the case, the First-tier Tribunal, sided with HMRC. But two more senior courts have ruled the other way: the Upper Tribunal overturned the first decision in 2025, and the Court of Appeal has now agreed, rejecting all of HMRC’s arguments.
Inheritance tax on the family home: this may matter to hundreds of families
This is not just a technical victory for one estate. Thousands of home loan schemes were sold in the early 2000s, in different versions, before a 2004 change in the law brought the planning to an end. Many of the homeowners who set them up are still alive, or their families are only now dealing with estates where the plan was used.
Anthony Nixon, a consultant in our Tax & Estate Planning team who has advised on this particular planning for 25 years, says: “There must be a great deal of double trust paperwork sitting in back drawers that nobody has thought about for two decades. In many cases the people who put these plans in place are still with us. After the Court of Appeal have dismissed all of HMRC’s arguments, it will be fascinating to see whether HMRC finally throws in the towel.”
A word of caution: this isn’t a free pass
Before anyone celebrates, three important caveats.
Could HMRC appeal again?
HMRC may ask permission to appeal again, to the Supreme Court. That permission seems unlikely after so comprehensive a defeat.
Not every scheme is the same
There were many versions of this planning. The Elborne decision turned on the specific way that scheme was structured, and HMRC may try to distinguish other versions from it. Each specific case needs careful analysis.
The capital gains tax sting
There can be a sting in the tail. Because of a 2013 change in the law, families who save inheritance tax with these schemes can find a different tax bill, capital gains tax, waiting for them instead; income tax may also be an issue. Usually, inheritance tax savings will outweigh other tax bills, but every case is different.
What should you do?
If you, or your parents, put a double trust home loan arrangement in place in the late 1990s or early 2000s, don’t ignore it and don’t assume anything. Whether the scheme is now effective, and what the knock-on tax consequences are, depends entirely on how it was set up and what has happened since.
Our Tax & Estate Planning team, led on this issue by Anthony Nixon, can review your paperwork, explain where you stand on inheritance tax on the family home, and help you plan the best way forward. Anthony has advised on this planning since its earliest days and has written on the Elborne litigation for Tax Journal: Elborne: trusting that the loan will be deducted. Please contact Anthony Nixon for an initial conversation.
We publish blogs and social media posts to give a general overview of legal and commercial issues, relevant at the time of publication, which we hope you will find interesting. Please note that legal rules often change depending on the specific facts of a situation. The law also changes over time following changes in legislation or new court cases. We do not actively update our blogs or posts once they are published to reflect changes in the law.
As such, our blogs and posts are not intended to advise you on the law and must not be relied upon as legal advice. If you require advice on a particular issue then please contact us and we will be pleased to help.