The Basics

Everyone has a tax free amount that they can leave on death before IHT is payable. 

This is called the nil rate band (NRB) and is currently £325,000.  

The balance of the estate above the NRB is subject to IHT. 

As you will see, the NRB is reduced by the value of any chargeable transfers of value that have been made in the 7 years prior to death. 

Thus it is possible that if a person has made gifts amounting to more than £325,000 in the 7 years prior to their death that their entire estate passing under their Will (or the law of intestacy when there is no will), will be subject to IHT. 

If no gifts have been made then the first £325,000 of their estate is tax free and the remainder is subject to IHT.