Inheritance tax is charged at 40% on estates above the nil-rate band. For many families, the family home is what pushes the estate over the threshold. Understanding the reliefs available is essential.\n\nThe Nil-Rate Band — Every individual has a nil-rate band of 325,000. Estates below this value pay no IHT. This threshold has been frozen since 2009 and is currently frozen until April 2030. A married couple or civil partners have a combined allowance of 650,000 because any unused nil-rate band transfers to the surviving spouse on the first death.\n\nThe Residence Nil-Rate Band (RNRB) — An additional allowance of 175,000 per person is available when you leave your main residence to direct descendants (children, grandchildren, stepchildren). A married couple leaving their home to their children therefore has a combined IHT-free threshold of 1 million (325,000 plus 175,000 each, doubled). The RNRB tapers for estates above 2 million, reducing by 1 pound for every 2 pounds over the threshold. An estate of 2.35 million loses the RNRB entirely.\n\nSpouse Exemption — Transfers between spouses or civil partners are completely exempt from IHT, both during lifetime and on death. This means the first death typically triggers no IHT regardless of estate size. The nil-rate band and RNRB unused by the first spouse transfer to the survivor, effectively doubling the allowances.\n\nGifting the Property — You can give your home away during your lifetime, but the seven-year rule applies. If you survive seven years after the gift, it falls outside your estate entirely. If you die within seven years, the gift is taxed on a sliding scale (taper relief). Critically, if you continue to live in the property after gifting it, the gift with reservation of benefit rules mean the property remains in your estate for IHT purposes. You must either move out entirely or pay full market rent to the new owner.\n\nDownsizing — Selling a larger property and buying a smaller one releases equity. The cash from downsizing can be gifted to the next generation, with the seven-year rule applying. If you downsize specifically to take advantage of the RNRB and the new home qualifies, the relief still applies. If you downsize out of homeownership entirely, the downsizing provisions may allow you to retain the RNRB if you leave equivalent assets to descendants.\n\nTrusts — Placing property in trust can be part of an IHT strategy but carries its own tax charges. Transfers into most trusts above the nil-rate band trigger an immediate 20% IHT charge. Bare trusts for children avoid this charge but mean the child gains absolute control at 18. Trust planning requires specialist advice.\n\nLife Insurance — A whole-of-life insurance policy written in trust can provide a fund to pay the IHT bill without the family needing to sell assets. The policy pays out on death, and because it is written in trust, the payout itself is outside the estate. Premiums for guaranteed whole-of-life cover increase with age and health conditions. For a 55-year-old couple in reasonable health, cover of 200,000 costs approximately 200 to 400 per month.\n\nPractical Planning — Calculate your estate value including property, savings, investments, and pensions (most pensions are outside the estate but changes from April 2027 will bring unused pension funds within IHT). Determine your available allowances. Take specialist tax advice — IHT planning is complex and mistakes are expensive.