Inheritance Tax is a form of taxation charged over the value of your estate upon your passing. In most cases, the assets you leave behind (including any money, property or possessions) will be subject to Inheritance Tax if their value exceeds the threshold known as the 'nil-rate band' (or the additional ‘residence nil-rate band’ if applicable). The nil-rate band threshold currently stands at £325,000, and the residence nil-rate band at £175,000.
In practice, this means that you will not be expected to pay any Inheritance Tax if the total value of your estate is lower than the current threshold. If the estate you intend to pass on is worth more, you may pay the UK's standard tax rate of 40% on anything above the threshold.