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In the past Inheritance Tax (‘IHT’) was often classed as a rich man’s tax in the UK. However, an ever increasing number of middle-class people have now assets more than the Inheritance Tax exemption thresholds and therefore have potential exposure to IHT. Currently, everyone can leave £325,000 completely tax-free.
Above that amount, anything you leave behind is the subject tax of 40%. So for example, if you leave behind assets worth £500,000, your estate pays nothing on the first £325k, and 40% on the remaining £175k – a total of £70,000 in tax.
At Abraham and Associates, we can help you with your estate planning, including succession planning and business exit strategies.
There are some ways to reduce the potential tax liability on your estate, and they all involve careful planning – often over an extended period.