GORDON BROWN has been waging war on families who use schemes to cut their inheritance tax (IHT) bills, but firms are dreaming up ever more innovative plans to get round the changing rules. Two are being backed by Close Brothers this week.

The first, called Property Wealth Manager, enables you to pass on your home free from IHT. At present, your heirs must pay IHT at 40% on the value of your estate above £275,000. The scheme is being marketed by Close Brothers, but is run by Ioma Group, an Isle of Man insurance company.

The other scheme is the first venture-capital trust (VCT) to offer IHT benefits. It exploits the IHT exemption given to shares listed on the Alternative Investment Market (AIM).

Many families will be understandably nervous about entering into the schemes in case they fall foul of the taxman. But Close insists that Revenue & Customs has cleared Property Wealth Manager.

It did not need to seek reassurance from the Revenue, because IHT schemes are not covered by the general requirement for accountants and lawyers to obtain approval for avoidance schemes before they are marketed. However, Close felt it was wise to run it past the Revenue anyway, given the recent clampdown.

And there has been no indication, so far, that the government is thinking of scrapping IHT relief on AIM shares.

With Property Wealth Manager, you sell your whole house to Ioma in exchange for a lump sum and a guarantee you can live in it for the rest of your life.

It invests the lump sum in an investment plan worth the same as your home, less charges. If your home is worth £800,000, the plan would be worth £748,000 at outset — £800,000 less a 6.5% upfront charge.

The value of this plan will then move up and down in line with house prices. Your home has gone into a fund underlying the investment plan, along with the properties of every other customer.

You pass the investment to your children either as a straightforward gift or through a trust that will ensure they inherit it when you die. Your heirs will save IHT on the investment but the exact amount depends on how long you live. The money held in the plan will be entirely free of IHT only if you survive for another seven years after the gift has been made.

Your children will be given first refusal on the option of buying back the property when you die. The idea is that they use the money they have inherited in the plan to do this. In a roundabout way, the scheme can therefore enable you to pass on your family home to your children without death duties.

You could not give the property directly to your children because the Revenue does not allow you to make gifts and continue to benefit from them (by living in the property, for example). However, the plan bypasses these rules.

Ged Hosty, who designed the plan, said: “The Revenue has confirmed that Property Wealth Manager can work for IHT purposes and does not fall foul of the pre-owned assets regulations.”