Update following the Spring Budget in March 2023. The nil rate band has been frozen at £325,000 since 2009 and this will now continue up to 5 April 2028.

An additional nil rate band, called the ‘residence nil rate band’ (RNRB) is also frozen at the current £175,000 level until 5 April 2028. A taper reduces the amount of the RNRB by £1 for every £2 that the ‘net’ value of the death estate is more than £2 million. Net value is after deducting permitted liabilities but before exemptions and reliefs. This taper will also be maintained at the current level.

Estates in administration and trusts

Changes are introduced which will affect the trustees of trusts and personal representatives who deal with deceased persons’ estates in administration and beneficiaries of estates.

For 2023/24, technical amendments are made to ensure that, for beneficiaries of estates, their tax credits and savings allowance continue to operate correctly.

For 2024/25, changes will:

• Provide that trusts and estates with income up to £500 do not pay tax on that income as it arises.
• Remove the default basic rate and dividend ordinary rate of tax that applies to the first £1,000 slice of discretionary trust income.
• Provide that beneficiaries of UK estates do not pay tax on income distributed to them that was within the £500 limit for the personal representatives.

We hope you found this article useful. To read more updates from the Spring Budget, click here to view our blog pages.