Additional Nil Rate Band £1m Budget 2015

IHT NEWS Budget Speech 08/07/2015

In his first non-coalition Budget speech since the 2015 election, the Chancellor, George Osborne, on the 8th July 2015 presented the Summer Budget. This Budget gave an indication as to possible new measures and in line with the Conservative election manifesto the Summer Budget of 2015 announced a wide range of commitments to be introduced during the course of the current parliament.


As widely anticipated and in line with the Conservative manifesto the Chancellor announced that following changes to Inheritance Tax.



  • The inheritance tax (IHT) nil rate band, currently frozen at £325,00 until 2017/2018, will remain at this level until April 2021.


  • A new Additional Nil Rate Band (ANRB) is to be introduced when an individuals ‘main’ residence is passed on death (for deaths after 6th April 2017) to children or grandchildren. The new ANRB bands will be:

    £100,000 for 2017/2018

    £125,000 for 2018/2019

    £150,000 for 2019/2020

    £175,000 for 2020/2021

    These bands will increase in line with CPI for future years

  • The new ANRB will be added to the existing £325,000 IHT threshold, making the total tax-free allowance for a surviving spouse or civil partner up to £1 million in 2020-21.
  • The ANRB will be transferable between Spouse/Civil Partners conditional on deaths occurring post 6th April 2017.
  • Note that this ANRB will be tapered by £1 for every £2 the ‘net estate’ exceeds £2m, so, for net estates of over £2.2m (in 2017/18) only the usual NRB will be available. This effectively means that individuals leaving more than £2.35m will not benefit from the new allowance.
  • The tapering policy does, however, have a major flaw -where a home worth £175,000 is included in an estate with a value of between £2m and £2.35m, meaning that effectively a rate of 60% will be payable


  • For IHT purposes hitherto an individual would be "deemed" UK domicile and liable to UK IHT had they spent 17 years out of the last 20 as UK resident. Tnew definition of "deemed" domicile’ will apply if an individual has been UK resident for 15 out of the last 20 years.
  • Significantly, whereas "deemed" domicile status only counted for liability to IHT, under the new rules the scope of "deemed" domicile has been widened to include ALL UK taxes.
  • Note that these measures are still subject to consultation pending the introduction of the 2016 Finance Bill
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