New rules will prevent double IHT on pre-owned assets

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The Paymaster General, Dawn Primarolo, has announced new regulations which will prevent someone being charged double Inheritance Tax (IHT) when they dismantle an IHT avoidance scheme involving a pre-owned asset, such as their own house.

Since the new pre-owned asset tax was introduced in April last year, many people have dismantled schemes that were designed to avoid IHT on their family home while allowing them to continue living there. The new pre-owned asset (POA) regime specifically targetted such schemes, imposing income tax on assets that are given away but still used by the original owners.

Rather than pay the income tax, many people chose to bring their home back into their estate for IHT purposes, either by formally electing to do so, or by unravelled the IHT avoidance scheme. Howeve...

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