Inheritance Tax Isn't Just for the Rich Anymore (Frozen Since 2009)
Do you think inheritance tax is something only the wealthy need to worry about? You've got a house, some savings, and you've worked hard all your life, but you'd hardly call yourself rich?
Most people reading this would say yes to both, and for a long time that was a fair answer. The trouble is that one number at the heart of inheritance tax hasn't moved in over fifteen years. In this article I'll explain what that number is, what it would be worth today, who it's quietly catching, and the one simple check worth doing this week.
The Inheritance Tax Nil-Rate Band Has Been £325,000 Since 2009
Everyone gets a tax-free allowance before inheritance tax applies. It's called the nil-rate band, and it's £325,000. It was £325,000 in April 2009, and it's still £325,000 today. The government has now frozen it until April 2031, which means twenty-two years without a penny added.
So what would it be worth if it had simply kept pace with prices? Using the Bank of England's own inflation calculator, £325,000 in 2009 is worth £538,414 in today's money. That's more than £200,000 of allowance that has quietly gone missing. Nobody announced it and nobody voted for it. It simply stood still while house prices, savings and investments carried on rising.
Why HMRC Is Collecting Record Inheritance Tax
You can see the effect in HMRC's own figures. Its latest monthly bulletin, published on 22 September 2026, shows £3.8 billion collected in inheritance tax between April and August, and confirms that June 2026 was the highest month on record.
HMRC is open about the reasons. Alongside more wealth passing between generations and rising asset values, it points directly at the decision to hold the tax-free thresholds at their 2020 to 2021 levels up to and including 2030 to 2031. Your house kept going up. Your allowance didn't. That, in short, is how inheritance tax reaches families who never expected it.
Most Married Couples Are Still Fine: The Residence Nil Rate Band
Before anyone panics, some genuine reassurance. On top of the £325,000, there is an extra allowance of up to £175,000 when your home passes to your children or grandchildren. Its formal name is the Residence Nil Rate Band, but I think of it as the home allowance.
A husband, wife or civil partner can also pass their unused allowances to the survivor. So a married couple leaving the family home to their children can pass on up to £1 million between them before any inheritance tax is due. For many families, that is plenty of headroom.
Who the Frozen Threshold Is Really Catching
So who is being caught? Let me introduce Dave.
Dave is divorced. He owns a house worth £400,000 and has £200,000 in savings and investments, so £600,000 in total. Comfortable, certainly. Rich? Dave would laugh at you.
Because he's divorced, there is no spouse's unused allowance to pass across. He has his own £325,000, plus the £175,000 home allowance as long as his house goes to his children. That's £500,000. The remaining £100,000 is taxed at 40%, which leaves a £40,000 inheritance tax bill for Dave's children, on an estate that fifteen years ago would have been nowhere near the line.
It can be tighter still. If you have no children or grandchildren, or your home is going to a niece, a nephew or a friend, the home allowance doesn't apply at all. For you, the line is still £325,000, exactly where it was in 2009.
The One Check Worth Doing
Sit down and add up what you own at today's values, not what you paid for it: the house, the savings, the investments, everything. Then ask yourself honestly whether that total is anywhere near £325,000, £500,000, or £1 million.
If it is, that isn't a reason to worry. It's a reason to plan, and there is usually far more room for sensible planning than people expect, provided it's done in time and your Will, your gifts and your wider arrangements all line up.
This article is general information about UK estate planning and does not constitute legal or tax advice. Everyone's circumstances are unique, so if you'd like to talk through yours, we'd love to help.
If you'd like to chat through your own situation, you can book a free, no-obligation 15-minute call with me. No pressure, no jargon, just a friendly conversation to help you feel more informed.
See our video on this topic: https://youtu.be/2_2ZHvrE0D8
