History of the IHT Nil Rate Band: Frozen Since 2009 and Extended to 2030
The inheritance tax nil-rate band has been stuck at £325,000 since April 2009 — a freeze of 17 years and counting. Fiscal drag has quietly brought hundreds of thousands more estates within the IHT net without any change to the headline 40% rate.
NRB by Tax Year
| Tax year | NRB | Notes |
|---|---|---|
| 2003/04 | £255,000 | — |
| 2004/05 | £263,000 | — |
| 2005/06 | £275,000 | — |
| 2006/07 | £285,000 | — |
| 2007/08 | £300,000 | Transferable NRB introduced by Finance Act 2008 (backdated to 2007 deaths) |
| 2008/09 | £312,000 | — |
| 2009/10 | £325,000 | Freeze begins — held here ever since |
| 2017/18 | £325,000 + RNRB £100,000 | Residence NRB introduced at £100k, rising to £175k by 2020/21 |
| 2020/21–2025/26 | £325,000 + RNRB £175,000 | Combined £500,000 per person for qualifying homeowners passing to direct descendants |
| 2026/27–2029/30 | £325,000 + RNRB £175,000 | Autumn Budget 2024: both bands frozen until 2030 |
Row highlighted in amber = start of the freeze (2009/10).
Frequently Asked Questions
How long has the IHT nil-rate band been frozen at £325,000?
The IHT nil-rate band has been frozen at £325,000 since April 2009 — it was set at this level for the 2009/10 tax year and has not changed since. As of 2026/27, that is now 17 consecutive tax years at the same threshold. The Autumn Budget 2024 extended the freeze further, until at least April 2030 — meaning the NRB will have been frozen for at least 21 years by the time the freeze ends. No other UK income tax or allowance freeze has lasted as long in modern times.
What was the nil-rate band before it was frozen?
The nil-rate band rose steadily from £255,000 in 2003/04 to £325,000 in 2009/10. Key milestones: £285,000 in 2006/07; £300,000 in 2007/08 (the year the transferable nil-rate band was introduced by Finance Act 2008, backdated to apply to deaths since 9 October 2007); £312,000 in 2008/09; £325,000 from 2009/10. Before this period, the NRB was even lower — just £225,000 in 1997/98, rising gradually through the late 1990s and 2000s.
What is the Residence Nil-Rate Band and when was it introduced?
The Residence Nil-Rate Band (RNRB) was introduced by the Finance (No.2) Act 2015, taking effect from 6 April 2017. It provides an additional IHT-free allowance where a main residence (or equivalent qualifying residential interest) is inherited by a direct descendant — child, grandchild, or their spouses and civil partners. The RNRB started at £100,000 per person in 2017/18, rising by £25,000 per year until it reached £175,000 in 2020/21. It has been frozen at £175,000 since, and the Autumn Budget 2024 extended that freeze to 2030. A married couple or civil partners can combine NRB (£650,000) and RNRB (£350,000) for a total potential IHT-free threshold of £1,000,000 — but only where the property passes to direct descendants and the estate value does not exceed £2 million (RNRB tapers above £2m at £1 for every £2 above the threshold).
What is fiscal drag in the context of IHT and the nil-rate band?
Fiscal drag occurs when an allowance or threshold is not increased in line with inflation — so more people and more wealth gradually fall within the tax net over time, without any explicit tax rate rise. In IHT terms, the NRB frozen at £325,000 since 2009 means that, while house prices and investment values have increased significantly, the IHT-free threshold has not kept pace. The Office for Budget Responsibility estimated in 2024 that the freeze extension would bring hundreds of thousands more estates into IHT by 2030. In practice, an estate that was just below the NRB in 2009 may now be well above it — meaning a family that would have paid no IHT in 2009 now faces a significant bill, purely because of asset price inflation and the frozen threshold, not because they became measurably wealthier in real terms.
How does the transferable nil-rate band work and when was it introduced?
The transferable nil-rate band (TNRB) was introduced by the Finance Act 2008 and is now found at s8A IHTA 1984. It allows the unused proportion of a deceased spouse's or civil partner's NRB to be transferred to the survivor and used on the survivor's death. Before October 2007, married couples commonly used 'nil-rate band legacy' wills to ensure both NRBs were used. After the TNRB, this became largely unnecessary — the survivor can claim up to 100% of the deceased spouse's NRB in addition to their own. Crucially, the transfer is not of a cash sum but of the percentage unused: if the first to die used 50% of their NRB, the survivor can claim an additional 50% on their own death. The TNRB is claimed by executors on the second death — it does not transfer automatically.
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