Inheritance tax is charged on your death at the rate of 40% of the value of your assets which have exceeded the nil rate band. The nil rate band currently stands at £325,000.
From 6th April 2017 an additional residence nil rate band will apply so that less IHT will be paid when the family home is left to a direct descendant i.e. children or grandchildren or other "qualifying beneficiaries". The additional nil rate band will start off as £100,000 and is set to rise to £175,000 by 2021. So that by that time there could be a potential combined nil rate band of £1 million for spouses or civil partners.
The terms of your will can affect the ability to claim the residence nil rate band so it is important to review your will now.
If your estate is valued at over 2 million the residence nil rate band is tapered down however you should still review your will and estate planning to see whether it is possible to arrange your affairs so the residence nil rate band can be utilised.