The Autumn 2022 budget confirmed both the Nil Rate Band (NRB) and Residence Nil Rate Band (RNRB) will be frozen at a combined total of up to £500,000 per person until 2028. Ignoring the introduction of the RNRB (currently up to £175,000) in 2017, to which not everyone is entitled, the total wealth a person can shelter from Inheritance Tax (IHT) is set to be static for at least 19 years.
This is often referred to as stealth tax: since 2009, house prices have cumulatively risen 89.0%, global markets 253.6%, and general prices (RPI) 70.6%, yet the amount of estate that can be sheltered from tax is unchanged, meaning more and more people are steadily dragged into paying a tax they might otherwise have avoided had the payment threshold risen in line with everything else.
The current rate of IHT is 40% of all assets exceeding the available nil rate bands, with a reduction to 36% available to those who leave at least 10% of the baseline amount to charity (the baseline amount is broadly the value of the estate less the available NRB (excluding RNRB), and any reliefs or exemptions other than the value of the charitable legacy itself).
There are various gifting exemptions available and, whilst not all are available or appropriate for everyone, it is worth reviewing the options periodically to ensure you are making use of those that are available.
Please note, this document focuses on the various available gifting allowances and is not a comprehensive list of all IHT exemptions, nor does it go into detail on the NRB or RNRB.