It was previously frozen until 2025-26 when Prime Minister Rishi Sunak was prime minister, but Jeremy Hunt extended the freeze to 2028 in a statement last fall. The move was part of a wider tax expropriation to rebalance the books after Liz Truss and Kwasi Kwarteng’s ill-fated mini-budgets.
The income tax threshold freeze has also been extended from 2025-26 to 2028 and the tax-free dividend quota has been reduced to £1,000 in 2023-24 and £500 the following year.
The annual capital gains tax deduction has also been reduced from £12,300 to £6,000 in 2023-24 and to £3,000 next year.
Quilter’s David Gibb said:
“The consistent rise in housing prices has also exacerbated the problem, ultimately resulting in more individuals falling into the IHTnet trap.”
Everyone benefits from the £325,000 tax free allowance, or zero rate band. If the estate is less than this when a person dies, no tax is paid. However, if the property value is higher than this, there is a tax of up to 40% on everything above the threshold.
