IHTNRB Frozen Until 2028

7th December 2022

In his November statement, Jeremy Hunt has frozen the current NRB at £325,000 and RNRB at £175,000. The budget states that “qualifying estates can continue to pass on up to £500,000 and the estate of a surviving spouse or civil partner can pass on up to £1 million without an inheritance tax liability”. While this may sound like a significant amount, if the NRB had risen in line with inflation since last being set in 2009, it would be nearer £400,000 alone without the RNRB being accounted for.

Freezing the nil rate bands until at least April 2028 has greatly increased the prospect of more people paying inheritance tax. This is because in real terms, it has been frozen at this figure since 2009; 17 years in total. In comparison, it had been adjusted year on year between 2006 and 2009.

The Inheritance Tax Act 1984 established the threshold below which gifts, death estates or assets held in a trust were exempt from inheritance tax charges: the nil rate band (NRB). Following this, the Finance (No 2) Act 2015 introduced a further threshold under which the value of a principal private residence could be inherited by a lineal descendent free of inheritance tax: the residential nil rate band (RNRB).

Most people’s largest asset is their home and with property values set to rise, the frozen nil rate bands will become problematic for many people. The average property price in the UK in August 2022 was £296,000, but geographically, this is a varied picture. In London, the local average is £740,000. This means that if you are a single person today, your property alone puts you £240,000 over the frozen nil rate bands, leading to a considerable inheritance tax liability.

Timing will also effect inheritance tax liability. In 2009, the average property value was around £157,000 nationally (notably below the RNRB): being able to leave between £500,000 and £1 million tax free would have covered most people’s estates. If the average £8000 increase that has been seen year on year since 2009 continues, the average property may be worth £344,000 by 2028 (almost double the RNRB): considering the value of other assets will also increase over time, by 2028, the frozen nil rate bands begin to look far less generous. Effects are already being seen with HMRC revealing that inheritance tax receipts at the end of October was £400 million higher than this time last year. Without careful estate planning, many people will be subject to notable inheritance tax liabilities.

Home Leigh, New Garden Street, Stafford, ST17 4AG
01785 336222

Follow us:


Regulated by the Institute of Professional Willwriters. Registered in England and Wales Company Number 08290617. 

Copyright © Dunham McCarthy 2022

NRB Frozen Until 2028

NRB Frozen Until 2028