After your death your relatives will have to pay inheritance tax (IHT) at 40%, if the net value of your assets exceeds £325,000. A discounted rate of 36% applies if you leave at least 10% of your net estate to charity.

Where you leave the value of your home to a direct descendant, an extra IHT nil rate band of £100,000 applies, increasing the total nil rate band to £425,000. The home-related nil rate band increases by £25,000 each year until it reaches £175,000 from April 2020. Those who die after 5 April 2020 could have an IHT-free band worth £500,000, which may be doubled for a married couple or civil partners.

However, the home-related nil rate band can only apply where your home, or value derived from your home (if you have down-sized or moved to a care-home), is left to one or more of: your child, grandchild, great grandchild, step-child, foster child, or the spouse of one of those individuals.

Large estates won’t benefit from the full value of the home-related nil rate band, as it is tapered away by £1 for every £2 of the estate value which exceeds £2 million. The rules are extremely complicated, so we should discuss how your Will should be drafted to ensure that the maximum relief from IHT is obtained.