IHT Downsizing Addition UK: How to Claim the RNRB After Selling or Downsizing Your Home (2026)
Selling the family home does not automatically mean losing the RNRB. The downsizing addition (ss8FA-8FE IHTA 1984) allows executors to claim up to £175,000 of RNRB against other estate assets — provided the home was sold after 8 July 2015 and assets pass to direct descendants. Claiming it can save £70,000 per person in IHT.
| Scenario | Former Home Value | Downsizing Addition | IHT Threshold | IHT | Saving vs No RNRB |
|---|---|---|---|---|---|
| Home sold (2023), no home in estate; £600k estate to children | £500,000 | £175,000 (limited to RNRB max) | £325k + £175k = £500k | £40,000 | £70,000 vs no RNRB (£110,000) |
| Home sold (2023); downsized to smaller home worth £80k; £700k total estate | £600,000 | £175k − £80k = £95,000 | £325k + £80k (current) + £95k (downsizing) = £500k | £80,000 | £38,000 vs no downsizing addition (£118,000) |
| Moved to care home (2022), family home retained by surviving spouse — no disposal | N/A — home not sold; retained by spouse | N/A — no disposal; downsizing addition not available | £325k + £175k (on survivor's death if home then passes to children) | Standard RNRB on survivor's death | |
| Widow/widower: first spouse sold home in 2019; surviving spouse's estate has small flat | £400,000 (first spouse's sold home) | Transferred downsizing addition (s8FE IHTA 1984): the first spouse's downsizing addition % transfers to the survivor | Survivor's NRB + tNRB + own RNRB + transferred downsizing addition | Claim on IHT400 for survivor; form LD1 for transferred downsizing addition | |
| Home given away pre-8 July 2015 (2010 PET to children) | £350,000 (gifted 2010) | NONE — disposal before 8 July 2015 does not qualify | £325k (NRB only; no RNRB) | Standard calculation without RNRB | |
| Home in estate at death but smaller than former home (genuine downsize) | £600,000 (sold 2020) | £175k − min(£175k, current home value) | NRB £325k + current home RNRB + downsizing addition = up to £500k combined | Varies |
Downsizing addition: ss8FA-8FE IHTA 1984 (Finance (No.2) Act 2015). Three conditions: (A) qualifying residential interest disposed of on or after 8 July 2015 (completion date of sale); (B) estate includes lesser or no qualifying residential interest at death; (C) qualifying amount passes to direct descendants (s8K IHTA 1984). Downsizing addition = former home RNRB (min[£175k, former home value]) minus current home RNRB (min[£175k, current home value]). Combined RNRB capped at £175k (2026/27). RNRB taper (s8E IHTA): applies to combined RNRB including downsizing addition if estate >£2m. Claim form LD1 with IHT400. Transferred downsizing addition: s8FE IHTA — surviving spouse/CP can claim first deceased's unused downsizing addition. Claim with IHT400; evidence of disposal date and value. NOT automatic — executors must claim. Former home: former main residence (not BTL). Disposal before 8 July 2015: does not qualify. Qualifying amount proportionality: if assets to direct descendants < downsizing addition, the addition is proportionately reduced (s8FA(4) IHTA).
IHT Downsizing Addition: Complete Guide
What is the downsizing addition and why does it matter?
The RNRB (s8D IHTA 1984) was designed to allow the family home to pass to direct descendants with a lower IHT bill. However, it only applies to a 'qualifying residential interest' that is STILL IN the estate at death. This created a trap: anyone who sold their home (to fund care, to downsize, to release equity, or simply because they no longer needed it) before death would lose the RNRB entirely — even though the home had been in the family for decades and was clearly the sort of property the RNRB was meant to protect. To address this, the Finance (No. 2) Act 2015 introduced the 'downsizing addition' (ss8FA to 8FE IHTA 1984): a mechanism to claim the RNRB (up to £175,000 per person — the 2026/27 figure, frozen to 2030) against other estate assets when the family home is no longer in the estate. The downsizing addition is particularly relevant for: (1) elderly people who sold the family home to fund residential or nursing care and now have only cash/investments in the estate; (2) people who downsized to a smaller home (the current home is worth less than the full RNRB, so the downsizing addition tops it up); (3) people who sold the home in retirement and now rent; (4) widows and widowers where the deceased spouse's home has already been sold (the transferred downsizing addition under s8FE IHTA). The downsizing addition is claimed on HMRC form LD1 (Land and Buildings Return for Downsizing) submitted with the IHT400. The form requires: the former home's address, its value on disposal, the date of disposal, and evidence that the disposal was on or after 8 July 2015.
The three conditions for a downsizing addition — who qualifies
Section 8FA IHTA 1984 sets out three conditions that must all be met for the downsizing addition to apply: Condition A (disposal of a former home): the deceased must have had a 'qualifying residential interest' (the family home) that was disposed of on or after 8 July 2015. 'Disposed of' means the property left the estate — by sale, by gift (though GWR rules may mean it never left), or by moving out and no longer being a resident. The property must have been the deceased's home at some point (it cannot be a buy-to-let that was never occupied as a residence). The 8 July 2015 cut-off date is strict — properties disposed of before this date do NOT qualify, regardless of circumstances. Condition B (lesser residential property): the estate at death includes a qualifying residential interest of lower value than the former home — OR includes no qualifying residential interest at all. This condition is met if the person simply has no home in the estate (having sold their only home), or has a smaller home. Condition C (inheritance by direct descendants): a 'qualifying amount' of the estate must pass to one or more direct descendants (s8K IHTA 1984 — biological, adopted, stepchildren, grandchildren, etc.). The qualifying amount must be at least equal to the downsizing addition. If the assets passing to direct descendants are less than the downsizing addition, the addition is reduced proportionately (s8FA(4) IHTA). This means the downsizing addition only benefits the estate to the extent that assets actually pass to children — it cannot be wasted on non-direct-descendant beneficiaries.
Calculating the downsizing addition
The downsizing addition is calculated as: (A) the RNRB that would have been available if the former home was still in the estate at the death value (i.e. min(£175,000, value of former home at disposal or at death if retained)) MINUS (B) the RNRB actually available based on the current home (min(£175,000, value of current home if any)). If there is no home in the estate: the current home RNRB (B) = £0; the full downsizing addition = the former home RNRB (A). The former home's value used: not the value at date of disposal, but the lower of: the value at the date of disposal; and what the RNRB would have been at that time (noting the RNRB was introduced from April 2017: £100,000 in 2017/18, rising to £175,000 by 2020/21). However, the calculation uses current RNRB rates as at the date of death — so a home sold in 2019 when the RNRB was only £150,000: the downsizing addition is based on the current RNRB (£175,000 for 2026/27), not the RNRB at the time of disposal. This is more generous: a home sold in 2018 at £400,000 (RNRB then £125,000) still generates a full £175,000 downsizing addition today (because the former home is worth more than £175,000 and the current RNRB is £175,000). RNRB taper interaction: if the estate is above £2m (s8E IHTA 1984 taper), the downsizing addition is ALSO tapered proportionately. The taper reduces the total RNRB available (including the downsizing addition) by £1 per £2 excess above £2m.
Transferred downsizing addition — for widow/widower estates
Section 8FE IHTA 1984 provides a 'transferred downsizing addition' for the surviving spouse or civil partner of a person who had a downsizing addition available at their death. The mechanics mirror the transferred RNRB (s8G IHTA 1984): just as the unused RNRB of a deceased spouse can transfer to the survivor (claim form IHT436), any unused downsizing addition of the first deceased can also transfer. Scenario: husband sold the family home in 2021 (post 8 July 2015) and moved to a smaller property; husband died in 2023; the smaller property passed to wife (spousal exemption — no IHT on first death; RNRB not needed or only partial RNRB used on the smaller home); wife dies in 2026 with only savings and investments (no home). The wife can claim: (1) her own downsizing addition (if she herself disposed of a home after 8 July 2015); and (2) the transferred downsizing addition based on the husband's unused downsizing addition from the 2021 disposal. The transferred downsizing addition is calculated as a percentage of the surviving spouse's RNRB — using the same percentage approach as the transferred RNRB. Claim: form LD1 is submitted with the IHT400 for the surviving spouse's estate, together with evidence of the first spouse's home disposal (completion statement or Land Registry records) and the first spouse's death (IHT402 covering details). Both the transferred RNRB (IHT436) and the transferred downsizing addition (LD1) must be claimed — they are NOT automatic.
Practical checklist — claiming the downsizing addition
Executors of estates where the deceased sold or downsized from their home after 8 July 2015 should always check whether the downsizing addition applies. Step-by-step: (1) Establish whether a qualifying residential interest was disposed of after 8 July 2015: check the Land Registry or title deeds; obtain a completion statement from the conveyancing solicitors who handled the sale; confirm the date of completion. (2) Confirm the value of the disposed property at the date of disposal: RICS valuation or Land Registry price paid data. (3) Assess whether the estate includes a lesser (or no) qualifying residential interest: review the deceased's assets at death. (4) Confirm that assets equivalent to or more than the downsizing addition pass to direct descendants: check the will (or intestacy rules if no will); identify the direct descendants. (5) Complete HMRC form LD1 (Land and Buildings Return for Downsizing): available from HMRC. Submit with IHT400. (6) Claim the transferred downsizing addition if the deceased's predeceased spouse/CP also sold their home after 8 July 2015 and that transfer entitlement was never used. Common mistakes: failing to claim the downsizing addition when the home was sold years earlier (it is NOT automatic); failing to claim the transferred downsizing addition from a predeceased spouse; failing to update the will to ensure assets pass to direct descendants (if assets pass to a non-direct-descendant, the downsizing addition is reduced proportionately). A correctly claimed downsizing addition can save up to £70,000 in IHT (single person) or £140,000 (couple using transferred downsizing addition).
Frequently Asked Questions
What is the IHT downsizing addition and who can claim it?
The downsizing addition (ss8FA-8FE IHTA 1984) allows the RNRB (up to £175,000) to be claimed against other estate assets when the family home is no longer in the estate at death — because it was sold, gifted, or the person moved into rented accommodation or care. Three conditions: (1) the qualifying residential interest was disposed of on or after 8 July 2015; (2) the estate includes a lesser (or no) qualifying residential interest at death; (3) a qualifying amount of the estate passes to direct descendants. The downsizing addition = the RNRB that would have been available on the former home minus the RNRB on any current home. Claiming it can save up to £70,000 per person in IHT. It is not automatic — executors must claim it on HMRC form LD1 with the IHT400.
Can I claim the RNRB if I have sold my house and now rent?
Yes — if you sold your home on or after 8 July 2015 and your estate passes to direct descendants, the downsizing addition (ss8FA-8FE IHTA 1984) allows the executors to claim the RNRB against other estate assets (savings, investments, etc.). There is no requirement for a home to be in the estate at death — the downsizing addition tops up to a maximum of £175,000 (the RNRB for 2026/27). The estate must pass the 'qualifying amount' to direct descendants: children, grandchildren, stepchildren, etc. Claim using HMRC form LD1 with the IHT400. The key date is 8 July 2015 — sales before that date do not qualify.
What if my parent sold their house to pay for care home fees? Can I still claim the RNRB?
Yes — if the family home was sold on or after 8 July 2015 to fund care home fees (or for any other reason), and the estate at death passes to direct descendants, the executors can claim the downsizing addition. The sale of the home to fund care does not disqualify the claim. The downsizing addition allows the RNRB (up to £175,000) to be applied against the remaining estate assets (savings, investments, cash remaining after care fees). The 8 July 2015 cut-off date applies: if the home was sold before that date (to fund care or otherwise), the downsizing addition is not available. Claim form LD1 with IHT400; attach evidence of the sale date and value.
How is the downsizing addition calculated?
The downsizing addition = (A) the RNRB that would have been available if the former home was still in the estate at death (limited to £175,000 — the RNRB maximum) MINUS (B) the RNRB actually available on any current home in the estate (limited to the lower of £175,000 and the current home's value). Example: person sold their £500,000 home in 2022 (A = £175,000 — limited to RNRB max); no current home (B = £0); downsizing addition = £175,000 − £0 = £175,000. Example 2: person downsized from £500,000 home to £80,000 flat (A = £175,000; B = £80,000 — limited to current home value); downsizing addition = £175,000 − £80,000 = £95,000; combined RNRB = £80,000 (on flat) + £95,000 (downsizing addition) = £175,000 total. The combined RNRB is capped at the RNRB maximum (£175,000) — it cannot exceed this figure. The RNRB taper (s8E IHTA 1984) applies to the total RNRB including the downsizing addition if the estate exceeds £2m.
Can a widow or widower claim a transferred downsizing addition?
Yes — under s8FE IHTA 1984, any unused downsizing addition of a predeceased spouse or civil partner can be transferred to the surviving spouse in the same way the transferred RNRB works (s8G IHTA 1984). If the deceased spouse sold their home on or after 8 July 2015, and that downsizing entitlement was not used on the first spouse's death (because everything passed to the surviving spouse tax-free via the spousal exemption), the surviving spouse's executors can claim the transferred downsizing addition on the second death — adding to the transferred RNRB already available. Both claims (transferred RNRB via IHT436 and transferred downsizing addition via LD1) must be made by the executors of the second estate and are NOT automatic. Maximum combined claim: surviving spouse's own RNRB (£175k) + transferred RNRB (£175k) + any transferred downsizing additions = up to £350,000 of RNRB-type relief against the estate.
Ensure Your Will Directs Assets to Direct Descendants
The downsizing addition only works if estate assets pass to direct descendants. A will that redirects to a discretionary trust, or to non-direct-descendants, can invalidate the claim. WillSafe will kits for England and Wales from £39.99.
View Will Kits from £39.99