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HMRC internal manual

Inheritance Tax Manual

From
HM Revenue & Customs
Updated
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Life Policies: life policy linked with a loan and inheritance trusts: procedure

Once you have obtained all of the information set out at IHTM20502 and have confirmed that there is a life policy linked with a loan and an Inheritance Trust in the estate you need to consider the following questions

Are the arrangements in accordance with the original scheme as set out at IHTM20511?

If so, the claim to Inheritance Tax is limited to the original gift by the transferor plus the balance of the loan that remained outstanding at the date of death included as part of the estate.

If not,

Are the arrangements in accordance with the reverse loan scheme as set out at IHTM20521?

If so, the claim is limited to the original gift by the transferor and the balance of the loan (and any interest) is an allowable debt.

If the details do not seem to be in accordance with either the original or reverse loan schemes or you are unsure of the position, you should refer the case to Technical for advice