Inheritance tax freeze extended until 2030

The inheritance tax thresholds were due to be frozen until 2028, but this has been extended until 2030, according to Which?¹. The change was announced in the Autumn Budget by Chancellor Rachel Reeves¹.

Under the current rules, if an estate is worth more than £325,000, beneficiaries are liable to pay inheritance tax of 40% on anything above that threshold¹. The threshold rises to £500,000 if the estate includes a residence passed to direct descendants, and up to £1m when a tax-free allowance is passed to a surviving spouse or civil partner¹.

Because the thresholds stay at the same cash level for longer, the impact of inflation means more estates are likely to exceed the frozen threshold over time¹.

Separately, unspent pension funds will count as part of an estate for inheritance tax purposes from April 2027¹. That change is still some years away¹.

The freeze sits alongside other tax measures reported for 2025. Capital gains tax rates on assets rose from 10% to 18% for basic-rate taxpayers and from 20% to 24% for higher-rate taxpayers, effective immediately¹. Stamp duty for buy-to-let properties and second homes increased by two percentage points, also with immediate effect¹. The extra stamp duty relief for first-time buyers and home movers in England and Northern Ireland ends on 31 March 2025; from 1 April the first-time buyer threshold drops from £425,000 to £300,000, and home movers pay stamp duty on purchases over £125,000 rather than £250,000¹. Stamp duty rates and thresholds are different in Scotland and Wales¹.

Why it matters for households

The extension of the freeze means the £325,000 nil-rate band, the £500,000 residence allowance and the £1m combined allowance for surviving spouses or civil partners stay at their current levels for two years longer than previously planned¹. Because the thresholds do not rise with inflation, more estates are likely to exceed them as asset values grow¹. The 40% rate applies to the value above the threshold¹.

The pension change is separate and later: unspent pension funds will form part of an estate for inheritance tax purposes from April 2027¹. More detail on how the thresholds and rates work is set out in our guide to inheritance tax, and the treatment of pension pots is covered in pensions and inheritance tax.

Other measures affect different groups. Employers face a National Insurance rate rise from 13.8% to 15% from 6 April 2025, with the threshold at which employers start paying lowered from £9,100 to £5,000¹. The report notes that although these changes will not affect most people directly, critics suggested before the Budget that they could have a knock-on effect on employees through lower pay increases or less generous benefits in future¹. Council tax bills in England could rise by up to 5% from April 2025 without a referendum, which on an average Band D bill of £2,171 would mean a rise of £109¹.

What happens next

The inheritance tax thresholds remain frozen until 2030¹. Unspent pension funds count towards estates for inheritance tax purposes from April 2027¹. The stamp duty changes for first-time buyers and home movers in England and Northern Ireland take effect on 1 April 2025, following the end of the current relief on 31 March 2025¹. The employer National Insurance changes take effect on 6 April 2025¹.