Inheritance tax (IHT) thresholds would be £270,000 higher by the 27/28 tax year if they had risen in line with inflation, according to new analysis.
The £325,000 nil rate band for IHT would be set at £537,000 by the 27/28 tax year while the £175,000 resident nil rate band would be £233,000 if both had indexed in line with inflation, calculations by Chesnara Life (UK) suggest.
The threshold would be a combined £770,000 before IHT would kick in, according to Chesnara.
Thresholds will remain at current levels until April 2030, with total IHT nil rate bands for an individual remaining at £500,000 where a family home is left to direct descendants.
Mark Lambert, head of onshore bond distribution at Chesnara Life (UK), said: “The freeze on IHT nil rate and resident nil rate bands has already had a significant impact on estate planning and means ever increasing numbers of advisers and their clients will need to plan for IHT. The inclusion of unused pension funds in estates from April 2027 will add to that pressure and is already having an impact as advisers and clients look for strategies.
“We are seeing growing interest in onshore investment bonds and trusts from advisers and we are expanding our support so that they can confidently advise on the full range of estate planning solutions.”
Government data shows the percentage of estates likely to be subject to IHT will rise to 7% by 2032/33, nearly double the 4% subject to the tax in 2020/21
