Inheritance tax is a tax on the estate (the property, money, and possessions) of someone who has died. In the UK, the standard inheritance tax rate is 40%, and it is only charged on the part of the estate that is above the tax-free threshold, which is currently £325,000. This means that if the value of your estate is below the £325,000 threshold, there is normally no inheritance tax to pay. However, if the value of your estate is above the threshold, the part of your estate above it might be liable for tax at the rate of 40% .

If you give away your home to your children (including adopted, foster, or stepchildren) or grandchildren, your threshold can increase to £500,000. If you’re married or in a civil partnership and your estate is worth less than your threshold, any unused threshold can be added to your partner’s threshold when you die.

It is important to note that people you give gifts to might have to pay inheritance tax, but only if you give away more than £325,000. There are also reliefs and exemptions that can reduce the value of the estate, such as leaving everything above the threshold to your spouse, civil partner, a charity, or a community amateur sports club.

Inheritance tax must be paid by the end of the sixth month after the person’s death, and if it’s not paid by then, HMRC will start charging interest. The rules around inheritance tax can be complicated, and it may be necessary to seek professional advice.