Inheritance Tax (IHT) is payable on all transfers of value, whether these transfers are made during a persons lifetime or on death. At the present time, the first £325,000, known as the nil rate band (NRB) is taxed at 0%. IHT can also become due on certain lifetime gifts of assets, at a reduced rate of 20%, unless the transfer is to an exempt beneficiary. Depending on domicile, transfers between spouses and civil partners are normally exempt without limit, which means that IHT would only become payable upon the death of the survivor.

The NRB, also known as the inheritance tax (IHT) threshold, is the amount up to which an estate has no IHT to pay. … For any deaths after 6th April 2017 a residence nil-rate band may also be available. This can be added on top of the basic nil-rate band. The additional threshold is currently £100,000 but is scheduled to increase by £25,000 every 6th April until it reaches £175,000 in 2020.

“Inheritance tax is, broadly speaking, a voluntary levy, paid by those who mistrust their heirs more than they dislike the inland revenue” Roy Jenkins (former Labour Chancellor)