What Is Inheritance Tax?
Inheritance tax is the tax payable on any asset transferred out of the estate, unless it is an exempt transfer or was for value (i.e. something was sold at a proper market value). Transferring your home to a child of yours is unlikely to avoid inheritance tax if you continue to live in it without paying a proper rent.
The nil-tax band for inheritance tax varies each year with the Budget (currently £325,000) and the rate can also vary (currently 40% on everything over the nil-rate band). On death the whole of your estate is transferred, but liability for inheritance tax also arises on transfers made within the previous 7 years.