A PPT will not have any impact on inheritance tax below the nil rate band. Therefore there is also no 7-year rule affecting them. Once they are set-up they are fully active.
The main inheritance tax allowance is £325,000 – this is called the ‘nil-rate band’. No inheritance tax is payable on assets you own at the time of your death up to this value. This rate will be in force until at least 5 April 2022.
In addition, you have a ‘Residence Nil Rate Band’ (RNRB). This can be used where you give property in your Will to a direct descendant (for example, a child or grandchild).
Currently, the RNRB is £175,000 (2020/21 tax year).
Each person, therefore, has an allowance of up to £500,000 or £1M if you are a married couple on which they will pay no inheritance tax (depending on how much of the RNRB they are able to use).