The residence nil-rate band (RNRB) is an extra inheritance tax allowance worth £175,000 per person. It applies when someone leaves their home — or a share of it — to their children, grandchildren, or other direct descendants. Combined with the standard nil-rate band of £325,000, this means an individual can pass on up to £500,000 free of inheritance tax, and a married couple or civil partnership can pass on up to £1,000,000.
| Allowance | Per person | Married couple / civil partners |
|---|---|---|
| Standard nil-rate band (NRB) | £325,000 | £650,000 |
| Residence nil-rate band (RNRB) | £175,000 | £350,000 |
| Combined maximum | £500,000 | £1,000,000 |
If you are administering an estate that includes a family home, the RNRB could significantly reduce — or eliminate — the inheritance tax bill. This guide explains who qualifies, how the figures work, and how to claim it.
What is the residence nil-rate band?
The residence nil-rate band is an additional tax-free threshold that sits on top of the standard nil-rate band. It was introduced on 6 April 2017 under sections 8D–8M of the Inheritance Tax Act 1984 (inserted by Finance (No. 2) Act 2015), specifically to reduce the inheritance tax burden on families passing the family home to the next generation.
The standard nil-rate band of £325,000 applies to all estates regardless of what they contain or who inherits. The RNRB is specifically tied to a residential property passing to direct descendants. It does not replace the standard nil-rate band — an estate that qualifies for both has the two thresholds added together.
How much is the residence nil-rate band?
The RNRB is currently £175,000 per person. It reached this level in the 2020/21 tax year after being phased in from £100,000 in 2017/18.
Both the RNRB and the standard nil-rate band are frozen at their current levels until 5 April 2031. The freeze was set by Finance Act 2021, extended by Finance Act 2023, and extended again at Budget 2025 through Finance Bill 2025–26 (gov.uk — Budget 2025 overview of tax legislation and rates). After April 2031, the legislative default is for the RNRB to increase in line with the Consumer Prices Index each year — unless Parliament intervenes again (gov.uk — IHT thresholds from 6 April 2028).
Who qualifies for the residence nil-rate band?
The RNRB is available when three conditions are met (gov.uk — Check if an estate qualifies for the residence nil rate band):
- The person died on or after 6 April 2017.
- The estate includes a qualifying residential property — a home the deceased owned and lived in at some point. Buy-to-let properties that were never a main residence do not qualify. Only one property can qualify per estate.
- The property, or a share of it, passes to direct descendants — it must be “closely inherited” by a lineal descendant.
What “closely inherited” means
The property must pass to a direct descendant through one of these routes: by will, under the intestacy rules, by right of survivorship (for jointly owned property), or by a deed of variation made within two years of death.
The property does not have to pass entirely to direct descendants. If half of a home passes to a qualifying descendant and half to someone else, the RNRB applies to the qualifying share only.
Who counts as a direct descendant
Direct descendants are defined under section 8K of the Inheritance Tax Act 1984. They include:
- Children (biological, adopted, step-children, and foster children)
- Grandchildren and further lineal descendants
- Children for whom the deceased was a guardian or had a special guardianship order
- The spouse or civil partner of any of the above — including the widow or widower of a deceased child, provided they have not remarried or formed a new civil partnership
Nieces, nephews, siblings, friends, and charities are not direct descendants for RNRB purposes. If the home is left entirely to non-qualifying beneficiaries, the RNRB does not apply — though the standard nil-rate band still does.
How married couples and civil partners benefit
The RNRB can be transferred between spouses and civil partners in the same way as the standard nil-rate band. When the first spouse dies, any unused RNRB can be claimed by the survivor’s estate on the second death — even if the first spouse did not own a property at the time of their death (gov.uk — Work out and apply the residence nil rate band).
The transfer works as a percentage, not a fixed amount. If the first spouse used none of their RNRB (for example, because they left everything to the surviving spouse under the spousal exemption), 100% of their RNRB can be transferred. The percentage is then applied to the RNRB in force at the date of the second death.
Example:
- Alan dies in 2024, leaving his entire estate (including the family home) to his wife, Barbara. The spousal exemption means no IHT is due and his full RNRB (100%) goes unused.
- Barbara dies in 2026 with an estate of £900,000, including the family home worth £400,000, which she leaves to their two children.
- Barbara’s own RNRB: £175,000
- Transferred RNRB from Alan (100% of £175,000): £175,000
- Barbara’s NRB: £325,000
- Transferred NRB from Alan: £325,000
- Total tax-free threshold: £1,000,000
- Estate of £900,000 is below the threshold — no IHT is due.
To claim the transferred RNRB, the executor of the second estate must complete form IHT436 and submit it to HMRC alongside the IHT return (gov.uk — Claim to transfer unused residence nil rate band).
The tapering threshold for larger estates
The RNRB is reduced for estates valued above £2,000,000. The reduction is £1 for every £2 by which the estate exceeds the threshold. This is sometimes called the RNRB taper (gov.uk — Work out and apply the residence nil rate band).
For an individual with a £175,000 RNRB, the taper removes the allowance entirely at £2,350,000. For a couple with a combined RNRB of £350,000, the taper removes it at £2,700,000. The estate value used is the net value — after debts, but before deducting the nil-rate band or exemptions.
| Net estate value | RNRB reduction | RNRB available (individual) |
|---|---|---|
| £2,000,000 or below | £0 | £175,000 |
| £2,100,000 | £50,000 | £125,000 |
| £2,200,000 | £100,000 | £75,000 |
| £2,350,000 | £175,000 | £0 |
The taper threshold is also frozen at £2,000,000 until 5 April 2031 (gov.uk — Inheritance Tax thresholds).
For estates above £2 million, it is worth taking professional advice. The interaction between the taper, lifetime gifts, business property relief, and agricultural property relief can be complex, and small changes in the estate valuation can make a significant difference to the RNRB available.
The downsizing addition
If someone sold their home, downsized to a less valuable property, or gave their home away on or after 8 July 2015, their estate may still be able to claim some or all of the RNRB through the downsizing addition (gov.uk — How downsizing, selling or gifting a home affects the residence nil rate band).
All of the following must apply:
- The person sold, gave away, or downsized to a less valuable home on or after 8 July 2015.
- The former home would have qualified for the RNRB if they had kept it until death.
- Direct descendants inherit at least some of the estate (through any assets, not necessarily the property).
The calculation compares the RNRB that would have been available on the former home with the RNRB available on any current home at death. The difference — the “lost” RNRB — is the downsizing addition, capped at the value of other assets passing to direct descendants.
If the person sold their home entirely and did not buy another, the full RNRB can potentially be recovered — provided enough of the estate passes to direct descendants. If they downsized more than once after 8 July 2015, the personal representative can choose which disposal to use.
The claim must be made within two years of the end of the month in which the person died.
Residence nil-rate band and trusts
A property held in a trust before death will generally not qualify for the RNRB unless the trust arrangement means the property forms part of the descendant’s own estate on death (gov.uk — Check if an estate qualifies for the residence nil rate band). Specifically:
- A property left on immediate, absolute trust for a direct descendant qualifies — the beneficiary receives it outright.
- A property held in an interest in possession trust may qualify if the direct descendant has a qualifying interest in possession (meaning they have the right to occupy or benefit from the property for life).
- A property held in a discretionary trust generally does not qualify — because no single beneficiary has an automatic right to inherit the property.
If a will includes a condition that a beneficiary must reach a certain age before inheriting (for example, “to my daughter when she turns 25”), the property is held in trust in the meantime and may not qualify. This is an area where the drafting of the will matters — a solicitor specialising in estate planning can advise on alternatives.
How to claim the residence nil-rate band
The RNRB is claimed as part of the inheritance tax return when applying for probate. The forms involved are (gov.uk — Claim the residence nil rate band):
- Form IHT435 — used to claim the RNRB on the deceased’s own estate. This is submitted alongside the main IHT400 return.
- Form IHT436 — used to claim the transfer of unused RNRB from a predeceased spouse or civil partner.
For estates that do not need a full IHT400 return (because the estate is below the reporting threshold or qualifies for the simplified IHT205/IHT217 process), the RNRB may be taken into account automatically — but only if the estate clearly qualifies. If there is any doubt, completing the full return ensures the claim is properly made.
For straightforward cases — a surviving spouse leaving the family home to their children, with an estate below £2 million — the process is manageable without professional help. HMRC provides an online calculator to help work out the figures. For more complex situations — estates above £2 million, downsizing, trust arrangements, or blended families — professional advice from a solicitor or probate specialist is strongly recommended.
Common questions about the residence nil-rate band
Can I claim the RNRB if the deceased rented their home?
No. The RNRB requires the deceased to have owned a residential property (or a share of one) that passes to direct descendants. Rented accommodation does not qualify.
Does the RNRB apply if the home is left to a step-child?
Yes. Step-children are included in the definition of direct descendants under section 8K of the Inheritance Tax Act 1984. A step-child does not need to have been legally adopted — the step-parent relationship is sufficient.
What if the property is worth less than £175,000?
The RNRB is limited to the value of the property (or the share passing to direct descendants). If a home is worth £120,000 and passes entirely to a qualifying descendant, the RNRB available is £120,000.
Can the RNRB apply to a second home or holiday home?
Only one property can qualify per estate. It must be a property the deceased lived in as a residence at some point, though it does not need to have been their main residence at death. If more than one property qualifies, the personal representative can choose which to nominate.
What happens if neither spouse owned a property?
The RNRB cannot apply. The downsizing addition only helps where a property was disposed of on or after 8 July 2015. Without any qualifying property, the maximum tax-free threshold for a couple remains at £650,000 (the combined standard nil-rate bands).
Summary
The residence nil-rate band can shelter up to £175,000 of a family home from inheritance tax — or £350,000 for a couple who transfer the unused allowance. Combined with the standard nil-rate band, this creates a potential tax-free threshold of £1,000,000 for couples leaving their home to their children or grandchildren.
Claiming the RNRB requires forms IHT435 and (where applicable) IHT436 to be completed as part of the probate application. For most family estates the process is straightforward, though larger or more complex estates benefit from professional guidance.
For more on how inheritance tax works, see our inheritance tax hub, our guide to the nil-rate band, our explanation of the 7-year gift rules, and our practical guide to inheritance tax on property.
All figures verified against HMRC and gov.uk guidance, March 2026. Thresholds frozen until 5 April 2031 per Budget 2025. This guide covers England and Wales and is for information only — it does not constitute legal or tax advice. For complex estates, a solicitor or tax adviser can help ensure the correct reliefs and allowances are claimed.