The Frozen Nil-Rate Band: Fiscal Drag in Numbers

A frozen nil-rate band means the tax-free Inheritance Tax threshold stays fixed while wealth and asset prices rise, so more estates gradually exceed it. The nil-rate band has been fixed at £325,000 since the 2009 to 2010 tax year, and current policy holds it there for many more years (gov.uk, as at July 2026, subject to change).

This is a data piece. It sets out the published official figures on how the frozen nil-rate band interacts with rising receipts, estate numbers, and the share of deaths that attract a charge. It draws only on named official statistics from HMRC, the OBR and gov.uk publications, each cited at the point of use. It sits alongside our Inheritance Tax Explained guide, our IHT thresholds reference, and our wider estate planning guide. Figures are current as at July 2026 and are subject to change. The tax described applies across the UK; where devolved rules differ they are flagged.

What is fiscal drag on the nil-rate band?

Fiscal drag is what happens when a tax threshold is held flat while values rise, so more people or estates cross it over time without any change in the tax rate. For Inheritance Tax, the main tax-free threshold, the nil-rate band, has been £325,000 since 6 April 2009 (gov.uk, as at July 2026, subject to change). As house prices and savings grow, estates that once fell below it can now sit above it.

On top of the £325,000 nil-rate band, a residence nil-rate band of up to £175,000 can apply where a home passes to direct descendants, which can lift the combined allowance to up to £500,000 per person and up to £1,000,000 for a married couple or civil partners who can share unused bands. The standard rate on the value above the threshold is 40%, reduced to 36% where at least 10% of the net estate passes to charity (gov.uk, as at July 2026, subject to change).

Key figures at a glance

The frozen nil-rate band shows up in the official data as a steady rise in receipts, estate numbers and the share of deaths taxed. Each row below is a published statistic from a named source, with its reference period and a link. Receipts reached £8.5 billion in 2025 to 2026, and the £325,000 threshold has now been fixed for more than fifteen years (HMRC, as at July 2026, subject to change).

All figures as at July 2026 and subject to change. Receipts and forecast figures are UK-wide.

Estates and deaths in the data

The number of taxpaying estates and the share of deaths taxed have both risen. In the 2022 to 2023 tax year there were 31,500 taxpaying IHT estates, an increase of 3,700 (13%) on the previous year, and 4.62% of UK deaths resulted in an Inheritance Tax charge, up 0.23 percentage points (HMRC, as at July 2026, subject to change).

Even so, most estates pay no Inheritance Tax at all, and spouse and civil partner transfers remain a large exemption in the figures. HMRC estimates the spouse and civil partner exemption was used by 37,600 estates above the nil-rate band in 2022 to 2023, exempting £25.2 billion of qualifying property (HMRC, as at July 2026, subject to change). The table below sets the recent estate figures side by side.

Estate and liability figures per HMRC IHT liabilities statistics; exemption figures per HMRC IHT statistics. Both for 2022-23, as at July 2026, subject to change. UK-wide.

The extended freeze in numbers

The government has published its own estimate of what extending the freeze does. The measure fixing the thresholds to the end of 2030-31 is forecast to increase the number of taxpaying estates by 1,400 in 2028 to 2029 and by 2,900 in 2029 to 2030, equivalent to rises of 0.2 and 0.4 percentage points respectively in the share of UK deaths subject to Inheritance Tax (gov.uk, as at July 2026, subject to change).

Per gov.uk publication (from 6 April 2028), as at July 2026, subject to change. UK-wide.

What the numbers mean

Read together, the figures describe a slow, compounding shift rather than a sudden jump. A threshold fixed at £325,000 since 2009 loses ground each year that asset prices climb, so receipts of £8.5 billion in 2025 to 2026 partly reflect the same nominal band applying to larger estates (HMRC, as at July 2026, subject to change). None of this is a change in the 40% rate; it is the base widening beneath a still threshold.

The share of deaths taxed remains modest in the latest published year, at 4.62% for 2022 to 2023, so the great majority of estates still pay nothing (HMRC, as at July 2026, subject to change). The government's own forecast for extending the freeze adds only fractions of a percentage point a year to that share (gov.uk, as at July 2026, subject to change). The effect is real but gradual, and it tends to matter most for estates already near the combined threshold, particularly where a home makes up much of the value. Whether any of this affects a given family depends entirely on their own circumstances, so it can be worth discussing the figures with a qualified professional rather than reading a trend as a personal outcome. Forecasts can change at any fiscal event.

Scotland, Wales and Northern Ireland

Inheritance Tax is a UK-wide tax, so the £325,000 nil-rate band, the up to £175,000 residence nil-rate band, the 40% rate and the freeze to the end of 2030-31 apply the same way in England, Wales, Scotland and Northern Ireland (gov.uk, as at July 2026, subject to change). What differs across the nations is the surrounding law that shapes an estate, such as succession rules and, in Scotland, legal rights of children and spouses, and the process for winding up an estate. The statistics above are collected UK-wide, so they are not broken down by nation here.

Sources and methodology

Every figure on this page comes from a named official source and was checked against that source before publication. No number has been estimated, rounded beyond the source, or extrapolated. Where a source gives a range or a forecast, it is described as such. The sources used are listed below with their reference periods.

• Nil-rate band history: gov.uk, Inheritance Tax thresholds and interest rates (£325,000 from 6 April 2009). As at July 2026.
• Core rates and allowances: gov.uk, Inheritance Tax (£325,000 NRB, up to £175,000 RNRB, 40%/36% rates). As at July 2026.
• Annual receipts trend: HMRC tax receipts, annual bulletin (£3.5bn in 2006-07 to £8.5bn in 2025-26).
• Taxpaying estates, share of deaths, liabilities: HMRC Inheritance Tax liabilities statistics, commentary (2022-23).
• Spouse and civil partner exemption: HMRC Inheritance Tax statistics, commentary (37,600 estates, £25.2bn, 2022-23).
• Extended freeze forecast: gov.uk publication (from 6 April 2028) (freeze to end of 2030-31 (5 April 2031); 1,400 and 2,900 additional estates).
• Forecast receipts: Office for Budget Responsibility, Inheritance tax (£8.7bn, 0.3% of national income, 2025-26 forecast).

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