Inheritance Tax

What is the residence nil-rate band?

Answered by Jordan Onraet-Wells, Founder & Chartered Tax Adviser (CTA). Published 9 August 2026. Last reviewed 9 August 2026.

The short answer

The residence nil-rate band (RNRB) is an extra inheritance tax allowance of up to £175,000 per person in 2026/27, available when you leave your home, or a share of it, to direct descendants such as children or grandchildren. It sits on top of the standard £325,000 nil-rate band, and because both bands transfer between spouses, a married couple can pass on up to £1 million before any IHT is due. It is easy to lose: estates over £2 million are tapered, the home must go to the right people, and the allowance has to be claimed rather than applied automatically.

Worth up to £175,000 per person in 2026/27, frozen at that level until 5 April 2031, and capped at the value of the home actually passing to descendants.
Only available where the home is closely inherited by direct descendants: children, grandchildren and other lineal descendants, including step, adopted and foster children, but not siblings, nieces or nephews.
Tapered by £1 for every £2 the net estate exceeds £2 million, measured before reliefs and exemptions, so a single person's band is gone by about £2.35 million and a couple's by about £2.7 million.
Unused RNRB transfers to a surviving spouse or civil partner, even if the first death was before 6 April 2017, giving a couple up to £350,000 of RNRB.
It is not applied automatically: the personal representatives must claim it on form IHT435, with form IHT436 for a transferred band, and claims for the transferred band and the downsizing addition are normally due within two years of the end of the month of death.

An extra allowance for passing on the family home

The RNRB was introduced from 6 April 2017 and is worth up to £175,000 per person for deaths in 2026/27. It only applies where the estate includes a home the deceased lived in at some point and that home, or a share of it, passes to direct descendants. The amount is capped at the value of the home passing to them: leave a £120,000 half-share and the RNRB on it is £120,000, not £175,000. The £1 million figure often quoted for couples comes from combining two nil-rate bands (£650,000) with two residence bands (£350,000), and it is a ceiling, not an automatic entitlement. Our full guide to UK inheritance tax covers how the bands fit together.

How it is lost: the wrong people, the wrong trust, the £2m taper

Direct descendants include children, grandchildren, step, adopted and foster children, and the spouse or widow of a lineal descendant. They do not include siblings, nieces, nephews or friends, so leaving the home to any of them forfeits the allowance entirely. The home generally needs to pass outright or through certain qualifying trusts; a gift into a fully discretionary trust usually fails even where children are among the beneficiaries. The taper is the other big trap: the band shrinks by £1 for every £2 the net estate exceeds £2 million, and that test ignores reliefs such as business property relief and the spouse exemption, which catches many business and farming families whose gross assets sit well above £2 million.

Downsizing, transfers and making the claim

Selling up does not have to waste the band. A downsizing addition can preserve the RNRB where you sold, gave away or moved to a less valuable home on or after 8 July 2015 and direct descendants inherit at least some of the estate, which protects people who move into care homes or smaller flats. Unused RNRB also transfers between spouses as a percentage, applied at the rates in force on the second death, and the transfer works even if the first spouse died before the RNRB existed or never owned a home. None of this happens automatically: the personal representatives claim on form IHT435, with form IHT436 for a transferred band, and the claims for the transferred band and the downsizing addition are normally due within two years of the end of the month of death. Horizon reviews estates and wills against the RNRB rules on fixed fees agreed upfront; book a free clarity call at /book to check whether your estate keeps or loses it.

Go deeper

Sources and further reading

This is general information for the 2026/27 UK tax year, not personal tax advice; speak to a Chartered Tax Adviser about your own position.

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