Every person in the UK has an allowance for IHT, known as the Nil-Rate Band. For an individual, this is £325,000, but this can be transferred to a spouse so that a couple can have an estate worth £625,000 and not pay any IHT.
Any amount over this allowance will usually be taxed at 40 per cent unless other reliefs are being used.
Since 2017 families have also been able to make use of the Residence Nil-Rate Band, which is an additional allowance connected to property. This was introduced in response to growing house prices across the UK.
This allowance, as of 6 April 2020, works alongside the Nil-Rate Band to allow couples to pass on up to £1 million tax-free, as long as a property that you had at some time used as a dwelling, is passed on either to a surviving spouse or directly to your lineal descendants.
To use this allowance your estate must be valued at no more than £2 million. If your estate is more than £2 million then for every £2 above that amount you would lose £1 of the relief.