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, the phase-in history, downsizing rules, trust considerations, and how to claim.
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 (IHTA 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 was phased in gradually from £100,000 in 2017/18, rising by £25,000 each tax year:
| Tax year | RNRB per person |
|---|---|
| 2017/18 | £100,000 |
| 2018/19 | £125,000 |
| 2019/20 | £150,000 |
| 2020/21 onwards (frozen) | £175,000 |
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).
The phase-in matters for estates where someone died before 6 April 2020. If the first spouse died in, say, 2017/18, the maximum transferable RNRB from that death is based on £100,000 – not the £175,000 in force today. The percentage of unused RNRB is transferred, which is then applied to the current maximum at the second death.
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.
What does not qualify
The following situations fall outside the RNRB:
- Rented accommodation: the deceased must have owned the property, not rented it
- Buy-to-let property: qualifies only if the deceased also lived there at some point
- Gifts made during lifetime: the RNRB cannot be used against failed potentially exempt transfers or chargeable lifetime transfers
- Property passing only to non-qualifying beneficiaries: siblings, nieces, nephews, and friends all fall outside the direct descendant definition
- Certain trusts: see the trusts section below
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.
Transferred RNRB and the taper
If the first spouse’s estate exceeded the £2 million taper threshold, the amount of transferable RNRB is itself reduced. The taper is calculated separately for the first estate – the percentage of RNRB that was unused (after any taper reduction at the first death) is what transfers to the second estate. This means high-value estates can see a double taper effect: the first estate’s RNRB is tapered, reducing the transferable percentage, and the second estate’s own RNRB may be tapered as well.
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, exemptions, or reliefs such as business property relief or agricultural property relief.
| 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).
Note that the taper is calculated on the gross net estate before applying reliefs. Business property relief or agricultural property relief reduces the taxable estate but does not reduce the estate figure used to calculate the taper. A £2.4 million estate with 100% business property relief on £600,000 of assets still uses £2.4 million for the taper test – leaving a reduced but not zero RNRB.
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.
How the RNRB and the standard nil-rate band stack
When both allowances are available, the order of application matters. The standard nil-rate band (NRB) is applied first against the total chargeable estate. The RNRB is then applied specifically against the value of the qualifying residential interest passing to direct descendants.
Because the RNRB can only be set against the property – not against other assets – the order generally produces the same IHT result. The distinction becomes relevant in a few edge cases: if the property passes partly to direct descendants and partly to others, or where a deed of variation redirects assets after death.
The HMRC online calculator at tax.service.gov.uk works through both allowances in sequence and is reliable for straightforward estates.
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 (IHTA 1984 ss.8FA–8FE, inserted by Finance (No. 2) Act 2015) (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 itself).
- A claim is made within two years of the end of the month in which the person died.
How the calculation works
The calculation compares the RNRB that would have been available when the home was disposed of against the RNRB available on any current home at the date of death. The difference is the “lost” RNRB – subject to a cap.
The five steps HMRC uses are:
- Determine the maximum RNRB available at the date of disposal (plus any transferable RNRB from a spouse, if applicable). For disposals between 8 July 2015 and 5 April 2017, the maximum is treated as £100,000.
- Calculate the percentage: divide the former home’s value by the step 1 figure, capped at 100%.
- If there is a current home at death, calculate the percentage for that property: divide its value by the maximum RNRB at the date of death, capped at 100%.
- Subtract the step 3 percentage from the step 2 percentage.
- Multiply the maximum RNRB at the date of death by the step 4 percentage. This is the lost RNRB.
The actual downsizing addition is the lower of:
- The lost RNRB calculated above
- The value of other qualifying assets (assets other than the current home) that pass to direct descendants
Example: Sara sold her £300,000 home in 2022 (when the RNRB was £175,000) and moved into care. She died in 2026 with no property, but left a £250,000 investment portfolio to her daughter.
- Step 1: Maximum RNRB at disposal = £175,000
- Step 2: Former home percentage = £300,000 ÷ £175,000 = 100% (capped)
- Step 3: No current home = 0%
- Step 4: Lost percentage = 100% – 0% = 100%
- Step 5: Lost RNRB = 100% × £175,000 = £175,000
- Downsizing addition = lower of £175,000 and £250,000 = £175,000
Sara’s estate can claim the full £175,000 RNRB via the downsizing addition.
If the person sold their home 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.
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. This is a significant and commonly overlooked restriction.
- A bereaved minor’s trust (for children under 18 who have lost a parent) and an 18-to-25 trust can qualify.
The discretionary trust restriction matters particularly for wills drafted before the RNRB was introduced, which often used discretionary trusts as a tax-planning tool. 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. However, where a will leaves residue on discretionary trust and the trustees appoint the property to a direct descendant within two years of death, section 144 of IHTA 1984 may allow the appointment to be treated as if it had been made by the will itself – potentially preserving the RNRB.
This is an area where the drafting of the will matters enormously. 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 in two situations: to claim the transfer of unused RNRB from a predeceased spouse or civil partner, and to claim the downsizing addition where the home was sold or downsized on or after 8 July 2015.
For estates that do not need a full IHT400 return (because the estate is below the reporting threshold or qualifies for the simplified excepted estate 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.
The RNRB across the UK
The residence nil-rate band is a UK-wide allowance. It applies in England, Wales, Scotland, and Northern Ireland under the same rules and thresholds.
The key differences between jurisdictions are procedural, not substantive:
- In England and Wales, you apply for a grant of probate from the Probate Registry.
- In Scotland, the process is called confirmation, granted by the Sheriff Court. The RNRB forms are the same (IHT435/IHT436), and HMRC’s Scottish confirmation process works alongside the standard IHT return.
- In Northern Ireland, probate is granted by the Probate Office in Belfast.
The RNRB calculation, thresholds, and eligibility rules are identical across all four nations.
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. The unused portion can be transferred to a surviving spouse’s estate.
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 or disposal, 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 – particularly those involving the taper, trusts, or the downsizing addition – 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, June 2026. Thresholds frozen until 5 April 2031 per Budget 2025 (Finance Bill 2025–26). RNRB: IHTA 1984 ss.8D–8M; downsizing addition: IHTA 1984 ss.8FA–8FE (both inserted by Finance (No. 2) Act 2015). This guide covers England, Wales, Scotland, and Northern Ireland 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.