Inheritance tax applies to estates above the nil-rate band (325,000 per person). For many homeowners, their property alone exceeds this.\n\nThe Residence Nil-Rate Band — An extra 175,000 when you leave your home to direct descendants (children, grandchildren). Combined threshold: 500,000 per person or 1,000,000 for a married couple. Tapers away for estates above 2 million.\n\nMarried Couples — Transfers between spouses are completely exempt. Unused nil-rate band transfers to the survivor. A couple can therefore have 1,000,000 combined threshold, covering the majority of UK property values outside London.\n\nGifting Property — You can gift your home and survive seven years for it to fall outside your estate. But if you continue living in it, HMRC treats it as a Gift with Reservation of Benefit and it remains in your estate. The only workaround is paying full market rent to the new owner.\n\nTrusts — Placing property in trust triggers an immediate 20% charge on value above the nil-rate band plus ongoing periodic charges. Also creates CGT complications. Generally only suitable for high-value estates with professional advice.\n\nPractical Steps — Write a will (over 50% of UK adults do not have one). Leave your home to direct descendants for the RNRB. Consider life insurance written in trust to cover the expected IHT bill — proceeds go directly to beneficiaries outside the estate. Review your plan when circumstances change.