Due to increasing care needs my mother has recently moved from the family home into residential care. I will inherit the house along with my siblings when she dies. We understand that this means an extra inheritance tax allowance becomes available, but we’re considering selling the property now as it’s expensive to maintain and manage. Would we lose the extra tax allowance?

When someone moves into care it leaves them and their loved ones facing many tough decisions, not least how to fund that care. Inheritance tax should also be on your radar.

Inheritance tax is a tax on the estate of somebody who has died, and includes their property, possessions and money. The standard tax rate is 40 per cent - but only on the value of the estate over certain tax-free allowances.

Not many people pay inheritance tax - just 3.76% of deaths result in a charge - but where tax is due, it’s often because of the value of the properties in the deceased’s estate.

Rising house prices have pushed the value of many people’s estates over the £325,000 tax-free allowance, known as the ‘nil-rate band’.

This hasn’t changed since 2009, even as average house prices rose around 80 per cent.

The residence nil rate band (RNRB) is an extra tax-free allowance worth £175,000. It only applies if you leave your home to a direct descendant, either children or grandchildren.

If the total estate is worth more than £2m, the extra allowance tapers off, falling by £1 for every £2 above the threshold.

As you can leave money, property or assets to your spouse or civil partner tax-free, and pass them your unused tax allowances, you could effectively double the nil rate band and RNRB allowances.

So if one partner leaves all their estate to the surviving partner, the surviving partner could pass on up to £1m tax-free when they die.

Even if you sold your mother’s property, you wouldn’t necessarily lose the RNRB due to what’s called the ‘downsizing addition’.

Under it, an estate may still qualify for the allowance even if the property has been sold by the time of death, provided it would have met the above criteria, and the direct descendants inherit at least some of the estate.

As the name suggests, the downsizing addition also applies if the deceased person had downsized to a smaller home by the time they died.

Usually, the downsizing addition will be the same as the RNRB lost when the former home is sold. It will be worked out and claimed when administering your mother’s estate, not when you sell the property.

Making the most of the nil-rate band and RNRB is an important part of planning for inheritance tax. Another is making sure that the value of your estate fits within those allowances to begin with.

You can make unlimited inheritance tax-free gifts of any size, up to seven years before your death.

Within those seven years, inheritance tax applies on a sliding scale, though some gifts will still be exempt. You can give away £3,000 tax-free each year and, as you can carry over one year’s unused allowance, you can effectively give away £6,000 in the first year.

There are some additional gift allowances too – for instance, you can pay £5,000 towards a child’s wedding and £2,500 towards a grandchild’s.

You can also give smaller gifts worth up to £250 to any individuals who haven’t benefited from your annual gift exemption, plus unlimited gifts out of surplus income.

Gifting or leaving money to charity is inheritance tax-free and it can also reduce the burden on your beneficiaries. If more than 10% of your taxable estate goes to charity, any inheritance tax due on the rest will fall from 40 per cent to 36 per cent.

The simplest way to cut your inheritance tax bill would be to spend sooner rather than later.

Not only is this inheritance tax free, but could prove more lucrative for your beneficiaries.

Sam Richardson: How to navigate inheritence tax allowence