If she has less than �300K (or the limit at the date of death - it does go up each year) there is no IHT
She can give a single gift of �3000 each year (or �6K every 2 years) without strings, plus small gifts out of income for birthdays, Christmas, etc.
Gifts over the �3K limit fall under the 7 year rule.
She will pay income tax on the interest from the sale proceeds (assuming it's in a bank, etc) while she is alive. When you get it it will no longer be interest, but capital, so it will form part of the total.