Inheritance Tax /Gift tax

Mothman

There would be no reducing IHT scale as this only applies to gifts made above the nil rate band. So for example if your friend had gifted £350k then £25k of that would be available to IHT tapering should he have died within 7yrs. As the gift was only £20k this will just use up £20k of the available NRB.

macman

You are correct about the 7 year rule, but it is not a 'gift tax'. Gifts from capital just prior to death would be viewed as part of the estate for IHT purposes. 
If you are over the nil rate band of 500k (and assuming the value of the house is more than £175k) then there is £5k potentially liable for IHT at 40%, so £2,000. However, once you have allowed for funeral costs and any other debts such as utility bills etc, it is likely that the estate is only slightly over 500k, if at all.
You'll have a clearer picture once the property is valued for probate.

Keep_pedalling

Make sure you get a proper paid for (RICS) valuation, estates that a very close to the IHT threshold are likely to get closer scrutiny from HRC that one that is well under, so valuations are more likely to be challenged.

Mothman

Also worth noting that if any of his savings were in a pension then this amount would be outside of his estate.

Laurieo

On the valuation from a  paid (RICS) it gives a figure with existing lease and one with benefit of new freehold ,which figure should I use on IHT form.
New freehold lease ( not agreed yet) but it adds about £29k to estate. 
The estate will be under the £500K threshold if using present leasehold figure .

Jeremy535897

You value the estate as what it contained at the date of death. If the executors subsequently extend the lease, that is irrelevant to the value at the date of death.