The Short-Lived Triumph Of Lady Ingram: Ingram Schemes Today

The most common objective in setting up an Ingram Scheme was to remove the family home's value from an individual or couple's Estate to reduce the Inheritance Tax liability.

The idea is that if the taxpayer did not own the family home, the value of the property at their death and any growth in the property's value since the scheme was set up would be outside of the Estate and not liable to inheritance tax.

Mrs Myerson was a wealthy lady aged 80 who owned the freehold interest in Myerson Manor.

Mrs Myerson wanted to reduce the size of her taxable Estate. She granted herself a lease of Myerson Manor for a period of 10 years.

Mrs Myerson gifted the freehold interest, subject to the lease, to trustees to hold for the benefit of her children and grandchildren.

At this time, Myerson Manor was worth £1.5 million. Mrs Myerson died 8 years later when Myerson Manor was worth £2 million.

The value of the freehold interest of £2 million was outside of Mrs Myerson's Estate, and the leasehold interest, with 2 years until expiry, had minimal value.

Ingram schemes are scarcely set up today for land interests. However, some schemes are already in place and may require action.

Firstly, if you set up an Ingram scheme, you need to be aware of HMRC having closed the loophole and the impact of this on your Estate. It is possible to avoid the scheme being treated as a gift with reservation of benefit by making payment of Pre-Owned Asset Tax. This is complex, particularly if it requires retrospective investigation since the loophole closed.

Secondly, if you are dealing with an estate that appears to involve an Ingram Scheme arrangement, it is important that you make the correct disclosures to HMRC to ensure the correct payment of tax and distribution of assets.