The bands, and how couples combine them
Alongside 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, and unused allowances can pass to a surviving spouse or civil partner. Combined, a married couple or civil partners may be able to pass on up to £1,000,000 before inheritance tax, depending on their circumstances (gov.uk, Inheritance Tax, as at July 2026, subject to change).
Transfers between spouses and civil partners are generally exempt, and the residence nil-rate band tapers away for larger estates above a £2,000,000 threshold (gov.uk, as at July 2026, subject to change). A reduced 36% rate can apply where 10% or more of the net estate passes to charity (gov.uk, as at July 2026, subject to change). These interactions can be involved, so for the wider picture see our overview of Inheritance Tax Explained and the nil-rate band through history.
Scotland and Northern Ireland
Inheritance tax is a UK-wide tax, so the £325,000 nil-rate band, the residence nil-rate band and the 40% rate apply across England, Wales, Scotland and Northern Ireland (gov.uk, Inheritance Tax, as at July 2026, subject to change). What differs is succession law: Scotland has its own rules, including legal rights that can entitle a spouse and children to a fixed share, and it uses confirmation rather than a grant of probate. Where an estate spans more than one jurisdiction, it can be worth taking advice in each.
Sources and methodology
Every figure in this article comes from a named official source and was checked against the live page in July 2026. No statistic has been estimated or projected beyond what the source states. Figures are subject to change at future fiscal events.
- Nil-rate band frozen at £325,000 since 2009, and frozen to 2030-31; £8.7 billion forecast receipts (2025-26); fiscal drag commentary. Office for Budget Responsibility, Inheritance tax (as at July 2026).
- Taxpaying estates (31,500, +13%), IHT liabilities (£6.70 billion, +12%) and average effective rate (13%), tax year 2022-23. HMRC, Inheritance Tax statistics: commentary.
- Nil-rate band, residence nil-rate band, 40% and 36% rates, £2,000,000 taper and £1,000,000 combined figure. gov.uk, Inheritance Tax and the nil-rate band and residence nil-rate band publication (as at July 2026).
- Average UK house price (£268,000, January 2026). ONS, UK House Price Index.
Frequently asked questions
What does the "real-terms value" of the nil-rate band mean?
Real terms means adjusting for changes in prices. The nil-rate band is fixed at £325,000 in cash terms (OBR, as at July 2026, subject to change). Because the figure does not rise with inflation or asset values, the amount it shelters buys less over time, so its real-terms value falls even though the number on paper stays the same.
How long has the nil-rate band been £325,000?
The threshold has stood at £325,000 since 2009, according to the Office for Budget Responsibility, which links the resulting rise in receipts to fiscal drag (OBR, Inheritance tax, as at July 2026, subject to change). That is a long period for a tax threshold to stay unchanged while wages, savings and property values have generally moved.
Is the nil-rate band frozen, and until when?
Yes. The nil-rate band is frozen up to and including the 2030-31 tax year (OBR, as at July 2026, subject to change). Earlier legislation had fixed the thresholds through 2030-31 (gov.uk, subject to change), and the freeze was later extended by a year. Future events could change this.
Why are more estates paying inheritance tax?
A frozen threshold and rising values generally pull more estates above the band. HMRC recorded 31,500 taxpaying estates in 2022-23, up 3,700 (13%) on the previous year (HMRC, 2022-23, subject to change). Crossing the threshold does not always mean a large bill, as the average effective rate was 13%.
Does the frozen nil-rate band apply across the whole UK?
Inheritance tax is a UK-wide tax, so the £325,000 band applies in England, Wales, Scotland and Northern Ireland (gov.uk, as at July 2026, subject to change). Succession law differs, though: Scotland has its own rules, including legal rights for a spouse and children, so how an estate is distributed can vary even where the tax rules are the same.
Can a couple still pass on up to £1 million?
In some cases, yes. By combining two nil-rate bands and, where a home passes to direct descendants, two residence nil-rate bands, a married couple or civil partners may pass on up to £1,000,000 before inheritance tax, depending on circumstances (gov.uk, as at July 2026, subject to change). The residence band tapers for estates above £2,000,000.
About Fairchild Oldfield
Fairchild Oldfield are estate planning specialists and will writers. We are not a firm of solicitors and we are not regulated as such.
This article is general information based on published data and practical experience. It is not legal, tax or financial advice, and does not create a professional relationship.
Important: This article is general information only and is not legal, tax or financial advice. Reading it does not create a professional relationship. It is based on the law of England and Wales; inheritance tax is a UK-wide tax, but other rules, including succession law in Scotland and Northern Ireland, may differ. Figures and rules are current as at July 2026 and are subject to change. Before acting, many people choose to seek advice from a suitably qualified professional, such as a solicitor, a STEP practitioner, an accountant, or an FCA-authorised financial adviser, who can consider individual circumstances.
