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Readers' forum : Replacement loan

10 May 2016
Issue: 4549 / Categories: Forum & Feedback

Would a replacement loan still qualify for an inheritance tax reduction?

Our client borrowed a large sum from his bank in 2006 and purchased shares in his own company with the proceeds. The loan was secured on his private residence. Had he died the inheritance tax payable on his shares in his own company would almost certainly have been zero because it would have attracted business property relief and of course the value of his house would have been reduced by the level of the mortgage.

FA 2013 put a stop to this for loans taken after 13 July 2013.

Our client’s bank is now reminding him that this loan expires in the summer of 2016. If it agreed to renew the loan we would be interested to learn readers’ views on whether it would still qualify in full for a deduction against his private residence. Alternatively would it fall foul of the new rule in...

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