Nil rate band

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

Autumn Budget 2025

Nil rate band

Produced by a Tolley Trusts and Inheritance Tax expert

Trusts and Inheritance Tax

Guidance

Autumn Budget 2025

Nil rate band (NRB) ― principles

Inheritance tax (IHT) is charged at the rate of 40% on estates at death or at half that rate, 20%, on chargeable lifetime transfers. The NRB is an important relief which assigns a rate of 0% to the lower portion of an estate or transfer.

Generally, IHT only becomes payable if the chargeable transfer exceeds the NRB in force at the time the transfer is made. In order to determine whether a transfer exceeds the NRB, it is added to the transferor’s previous chargeable transfers in the preceding seven years. This is known as the cumulation principle.

See Example 1.

The NRB is currently £325,000. This threshold has applied from 6 April 2009 and will remain at that level until 5 April 2031.

Thresholds in previous years can be found at inheritance tax thresholds and interest rates.

Every individual is entitled to a NRB regardless of their residence status.

An estate on death may also qualify for some or all of the unused NRB of the spouse

Continue reading the full document

To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™

TAKE A FREE TRIAL NOW

Popular Articles

Value Added Tax

Exporting goods ― proof of export

Exporting goods ― proof of exportIn addition to the requirements laid down in the Exporting goods ― overview guidance note, businesses intending to zero-rate exported goods must hold satisfactory evidence that the goods have been delivered to a destination outside of the UK. If satisfactory evidence

15 Dec 2020 14:02 | Produced by Tolley Read more

Owner-Managed Businesses

Trade or hobby

Trade or hobbyInteraction of hobby farming rules and commercialityFarming has its own set of ‘hobby farming rules’, which historically have stated that a profit must be made every six years. This is known as ‘the five-year rule’, in that there can be five years of losses but there must be a profit

14 Jul 2020 13:50 | Produced by Tolley Read more

Employment Tax

Parking provision and expenses

Parking provision and expensesCar parking facilities at or near to the employee’s workplaceThere is an exemption from tax and NIC where an employer provides parking, or pays for or reimburses an employee for the costs associated with car parking at or near the place of work; there are no reporting

14 Jul 2020 11:09 | Produced by Tolley Read more

Nil rate band