Tax dodge of the week: a neat way to avoid inheritance tax

You could potentially avoid inheritance tax liability by using a scheme known as ‘double dipping’, to pass on assets tax-free.

One of the "starkest contrasts" in the whole of the tax system is between the treatment of most forms of trading-business assets (which are 100% free of inheritance tax) and all other types of assets that are liable to IHT at 40%, subject to the £300,000 threshold, says The Schmidt Report.

The good news is that it is possible to pass on assets tax-free by using a scheme known as double dipping'. Take the following example, in which a widow has been left all the shares in Trading Ltd, worth £1m, by her husband, in addition to £1m cash. On her subsequent death, their only son, who is running the business, will face a tax bill of nearly £300,000 on the £1m cash (the shares pass tax-free).

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