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The IHT nil-rate band (£325,000) and residence nil-rate band (£175,000) are frozen until April 2030. With house prices rising faster than inflation, fiscal drag means many more estates will cross the threshold — paying IHT for the first time, or paying more. Proactive planning is the only way to mitigate the impact.
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This guide explains how the frozen thresholds affect different types of estates and what planning can reduce the impact. For a full overview of IHT, see our Complete UK Inheritance Tax Guide 2026/27.
The nil-rate band (NRB) — the threshold below which no IHT is charged — was last increased on 6 April 2009, when it rose to £325,000. It has not moved since. By the time the current freeze ends in April 2030, the NRB will have been static for 21 years.
Had the NRB kept pace with CPI inflation since 2009, it would be over £500,000 today. Had it tracked house price inflation, it would be significantly higher. Instead, rising property values mean a growing proportion of estates now exceed the threshold — purely because assets have become more valuable, not because the owners are wealthier in real terms.
The residence nil-rate band (RNRB), introduced in 2017, adds up to £175,000 of additional threshold for estates where a qualifying residential property passes to direct descendants. Like the NRB, it is frozen at its current level until April 2030.
For a married couple where both die leaving their home to children, the combined NRB and RNRB can reach £1,000,000:
However, the RNRB is subject to conditions. Read our detailed guide to the RNRB: eligibility, downsizing, and the taper for the qualifying requirements.
HMRC statistics show IHT receipts have risen sharply. In 2023/24, IHT raised £7.5 billion — up from around £3 billion a decade earlier. The Office for Budget Responsibility (OBR) projects receipts will continue rising through the freeze period.
Currently, around 4–5% of estates pay IHT. The OBR has projected that if thresholds remain frozen, this proportion could rise to 6–7% or more by 2030. In absolute terms, this means tens of thousands more families paying IHT each year than would otherwise be the case.
Property is the primary driver. The average UK house price was around £250,000 in 2023. In London and the South East, average house prices significantly exceed the NRB — meaning even a property of average value can push an estate above the threshold.
Illustrative example: single homeowner
If house prices rise 4% per year to 2030, the home would be worth c.£487,000 — the IHT bill grows to c.£125,000, even though the NRB stays at £325,000.
The RNRB is tapered away for estates above £2 million. For every £2 of estate value above £2 million, £1 of RNRB is withdrawn. An estate of £2.35 million loses the RNRB entirely. As house prices rise, more estates are pushed above this taper threshold, losing the RNRB at the same time as facing higher IHT bills.
This creates a compound effect: rising property values push estates above £2m, triggering RNRB withdrawal at the same time as increasing the taxable estate. For more detail see the RNRB taper guide.
The freeze itself cannot be planned around — but its impact can be managed through proactive IHT planning. The key tools are:
Lifetime gifts that fall within exempt categories, or that survive the 7-year period, reduce the taxable estate permanently. With thresholds frozen and estates growing, every year of inaction allows more value to accumulate above the nil-rate band. See our gifting strategy guide for 2025/26.
If you have surplus income — income exceeding your normal living expenditure — you can give it away free of IHT under the normal expenditure out of income exemption. There is no annual limit. This is particularly valuable for retirees with pension income exceeding their needs.
Wills should be reviewed regularly to ensure they make full use of available nil-rate band transferability, RNRB, and — where relevant — spouse exemptions. A will that was appropriate 10 years ago may no longer be optimal as the estate has grown. See our guide to transferring the nil-rate band between spouses.
A whole-of-life policy written in trust provides a lump sum on death to pay the IHT bill, without reducing the estate. This does not reduce the IHT itself but ensures the tax can be paid without forcing asset sales. See our guide to life insurance in trust.
Leaving 10% or more of the net estate to charity reduces the IHT rate from 40% to 36% on the remainder. For larger estates, this can save significant amounts. See our guide to the charitable legacy IHT reduction.
For a comprehensive overview of all 20 planning steps, see our IHT planning checklist for 2025/26.
Nothing has been announced beyond 2030. Previous governments have announced freezes that were then extended — the current NRB freeze has been extended multiple times since 2009. Whether the next government will raise thresholds in 2030, extend the freeze, or reform IHT more fundamentally is uncertain.
Planning on the assumption that thresholds will remain restricted — and that IHT receipts will continue to rise — is the prudent approach.
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