The Cost of the Nil-Rate Band Freeze, in Numbers

Freezing the nil-rate band does not change the headline rules, but it quietly raises the tax. When the £325,000 threshold stays fixed while houses, pensions and investments grow in value, a larger slice of more estates sits above the tax-free line, so inheritance tax receipts rise without any change in the rate.

This piece pulls together the published figures from HMRC and the Office for Budget Responsibility (OBR) on what that freeze looks like in numbers: how much inheritance tax is collected, how many estates pay, and what the average bill has been. Core allowance figures are current as at July 2026 and are subject to change; every statistic below is dated to the year it describes and linked to its source.

Key figures at a glance

The nil-rate band is £325,000 per person and has been held at that level since the 2009 to 2010 tax year (OBR, Economic and Fiscal Outlook, November 2025). Around it, the official statistics below track receipts, the number of estates paying, and the average bill. Each row is dated to its reference period and linked to a named source.

Figures relate to the reference period shown. HMRC liabilities estimates for recent years may be revised in later publications. Full details in the sources and methodology section below.

The rising take: receipts over time

Receipts have roughly doubled over two decades. UK inheritance tax receipts grew from £3.5 billion in 2006 to 2007 to £8.5 billion in 2025 to 2026 (HMRC tax receipts annual bulletin, published 19 June 2026). Not all of that reflects the freeze, but a fixed threshold against rising asset values is a recognised part of the trend.

The OBR forecast inheritance tax to raise around £8.7 billion in 2025 to 2026, which it describes as roughly 0.3% of national income, or about £300 per household (OBR, Economic and Fiscal Outlook, November 2025). For a more detailed look at how a static threshold interacts with asset growth, our companion piece sets out the fiscal drag in numbers.

How many estates are affected

Inheritance tax remains a minority tax, though the affected share has grown. In 2022 to 2023, 31,500 estates faced an inheritance tax charge, equal to 4.62% of the 683,000 UK deaths that year (HMRC Inheritance Tax liabilities statistics, published 31 July 2025). That share matched the previous high last seen in 2016 to 2017, and sat below the 2006 to 2007 peak of 5.96%.

The average bill among taxpaying estates was £212,000 in 2022 to 2023, and the average effective rate across those estates was 13%, well below the 40% headline because the tax-free bands, reliefs and exemptions reduce the taxable value of much of a typical estate (HMRC, published 31 July 2025). Total liabilities created reached £6.70 billion, a 12% rise on the prior year.

What the freeze can mean for a typical estate

Illustratively, a fixed band bites hardest where a home has appreciated. A couple can pass on up to £1,000,000 by combining two nil-rate bands and two residence nil-rate bands where a home goes to descendants (gov.uk, as at July 2026, subject to change). The figures below show why staying under that combined line matters as values drift upward.

Whether a particular estate is affected depends on its make-up, the availability of transferable bands, and any reliefs. Many people in this position choose to review the position periodically and, where the numbers are close to a threshold, to discuss it with a qualified professional who can look at the full picture.

Scotland and Northern Ireland

Inheritance tax is a UK-wide tax, so the £325,000 nil-rate band, the 40% rate and the freeze apply across Scotland, Northern Ireland, and England and Wales alike (gov.uk, as at July 2026, subject to change). What differs is the surrounding succession law: Scotland has its own rules, including legal rights for a spouse and children, and uses confirmation rather than a grant of probate. Where an estate spans more than one jurisdiction, it can be worth taking local advice.

Sources and methodology

Every figure on this page comes from a named official source and was checked against that source in July 2026. Receipts are actual cash receipts; liabilities statistics estimate tax due on estates by year of death and can be revised. Allowance figures are as at July 2026 and are subject to change.

• Inheritance tax rules and allowances: gov.uk, Inheritance Tax and gov.uk, nil-rate band and residence nil-rate band. Nil-rate band £325,000; residence nil-rate band up to £175,000; rates 40% / 36%; taper threshold £2,000,000; frozen to end of 2030-31, extended at the November 2025 Budget (see OBR below; as at July 2026).
• Receipts: HMRC tax receipts and National Insurance contributions for the UK (annual bulletin), published 19 June 2026. IHT receipts £3.5bn (2006-07) and £8.5bn (2025-26).
• Liabilities and estates: HMRC Inheritance Tax liabilities statistics: commentary, published 31 July 2025. 2022-23: 31,500 taxpaying estates; 4.62% of 683,000 deaths; £212,000 average bill; 13% average effective rate; £6.70bn liabilities created; 2006-07 peak share 5.96%.
• Forecast and freeze context: OBR, Inheritance tax forecast (Economic and Fiscal Outlook, November 2025). £8.7bn forecast for 2025-26, ~0.3% of national income / ~£300 per household; band held at £325,000 since 2009 and frozen up to and including 2030-31.
• Recent monthly receipts: HMRC tax receipts (monthly bulletin). £1.4bn for April to May 2026, £37m lower than the same period a year earlier.

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