The IHT nil rate band (NRB) has been frozen at £325,000 since 6 April 2009; the residence NRB has been £175,000 since 6 April 2020. It was previously announced that these figures would remain fixed until April 2026; this has been extended for another two years until April 2028, bringing more people within the scope of IHT as assets (particularly houses) rise in value.
The residence NRB is only available when a home is left to a direct descendent (or their spouse) on death. When an individual’s estate (before reliefs and exemptions) is valued at more than £2m, the residence NRB is progressively reduced. £1 of residence NRB is lost for every £2 by which the estate exceeds the limit, so none is available once an estate reaches £2.35m. This £2m taper threshold is also now frozen until April 2028.
There have been no changes to the IHT rates, so the main rate remains 40% for transfers on death in excess of the NRBs.