Residence Nil-Rate Band UK: The Additional IHT Threshold for Homes Left to Children (2026)
The RNRB (s8D IHTA 1984) adds up to £175,000 to the standard £325,000 NRB — giving single people up to £500,000 tax-free and couples up to £1,000,000. But it only applies when the main home passes to direct descendants (children, grandchildren), and it tapers away for estates above £2 million. Will planning is essential to claim it correctly.
| Situation | NRB | RNRB | Total IHT-Free | Key Condition |
|---|---|---|---|---|
| Single person, home to children | £325,000 | £175,000 | £500,000 | Home passes outright or via IPDI to children/grandchildren |
| Single person, no children or no home to descendants | £325,000 | £0 | £325,000 | No RNRB — no direct descendants, or home not passing to them |
| Married couple / civil partners (second death), both thresholds transferred | £650,000 | £350,000 | £1,000,000 | Both NRBs and RNRBs claimed; home passes to children on second death |
| Married couple, estate over £2.35m (single) / £2.7m (couple) | £325k–£650k | £0 (tapered) | NRB only | RNRB fully tapered; reduce estate via PETs, AIM, charity |
| Downsizing — home sold, other assets to children | £325,000 | Up to £175,000 (downsizing addition) | Up to £500,000 | Sold/downsized after 8 July 2015; claim on form IHT435 |
2026–27 figures. RNRB frozen at £175,000 until at least 2030. NRB frozen at £325,000 until at least 2030. Taper: £1 RNRB lost per £2 estate above £2m.
Residence Nil-Rate Band: Complete Guide
What is the Residence Nil-Rate Band?
The Residence Nil-Rate Band (RNRB) is an additional inheritance tax threshold introduced by the Finance (No. 2) Act 2015 (s8D IHTA 1984). It is available in addition to the standard Nil-Rate Band (NRB — £325,000) and specifically applies where a qualifying residential interest (typically the main home or a share of it) is inherited by direct descendants. The RNRB is set at £175,000 for 2020–21 onward and is frozen at this level until at least 2030 under current government policy (previously until 2028). It can be used against the value of the home passing to direct descendants — if the home is worth £175,000 or more, the full RNRB is available; if the home is worth less than £175,000, the RNRB is limited to the actual value of the home. Combined with the NRB, the RNRB gives a single person an effective IHT threshold of £500,000 (£325,000 + £175,000). A married couple or civil partnership, where both thresholds can be transferred, has a combined effective threshold of £1,000,000 (£325,000 + £175,000 + £325,000 + £175,000 = £1,000,000). Unlike the standard NRB (which applies to the whole estate), the RNRB is ringfenced for the main home and only available where it passes to qualifying direct descendants.
Who qualifies as a direct descendant for RNRB purposes?
The RNRB is only available where the qualifying residential interest passes to a direct descendant. 'Direct descendant' is defined broadly (s8K IHTA 1984) to include: (1) Children (biological, adopted, or step-children) — including those from any marriage, civil partnership, or relationship; (2) Grandchildren; (3) Great-grandchildren (and further generations); (4) Spouses or civil partners of any of the above — where the child has predeceased, the RNRB is still available if the home passes to the child's surviving spouse or civil partner; (5) Remoter lineal descendants. Who does NOT qualify: (a) Siblings, nieces, and nephews — these are not direct descendants, even if treated as family; (b) Step-grandchildren of the deceased (unless the step-grandparent's own biological child predeceased, creating a lineal line through the step-child); (c) Friends, unmarried partners, or cohabitees — no RNRB; (d) Charities, trusts (unless a disabled person's trust — s89 IHTA 1984 — or bereaved minor trust — s71A), companies. The RNRB is available if the home passes to a qualifying direct descendant under the will OR under intestacy (where intestacy rules direct the estate to children). If there are no direct descendants, the RNRB is entirely unavailable — the effective IHT threshold remains £325,000.
The RNRB taper: estates above £2,000,000
The RNRB tapers away for estates with a net value above £2,000,000. For every £2 the estate exceeds £2,000,000, the RNRB is reduced by £1. This means: (1) At exactly £2,000,000, the full £175,000 RNRB is available; (2) At £2,175,000, the RNRB is reduced by £87,500 to £87,500; (3) At £2,350,000 (single) or above, the RNRB is completely lost (£2m + £175k × 2 = £2,350,000); (4) A married couple's combined RNRB (£350,000) is completely lost when the estate exceeds £2,700,000 (£2m + £700k = £2.7m). The net estate for taper purposes is calculated after: subtracting liabilities (mortgages, debts); adding back chargeable transfers in the seven years before death (cumulative transfers) for some purposes; but BEFORE deducting any RNRB or NRB themselves. Important: gifts of the residence to charity reduce the estate value and can keep the estate below the £2m taper threshold — a strategic charitable legacy can preserve the full RNRB. Strategies to reduce estate below £2m taper: lifetime PETs; AIM BPR investments; annual gifting; pension restructuring before April 2027.
How to claim the RNRB: will planning essentials
The RNRB is not automatic — it requires the will (or intestacy rules) to direct the qualifying residential interest to qualifying direct descendants. Key will-planning points: (1) The will must specifically or residually leave the main home (or a share of it) to children or grandchildren — not to a standard NRB discretionary trust (the home in a discretionary trust does not qualify the RNRB unless the trust is a disabled person's trust or bereaved minor trust); (2) An Immediate Post-Death Interest (IPDI) trust for the surviving spouse passes the RNRB — the surviving spouse has an interest in possession in the property, and the remaindermen are the children. The home is treated as passing to the children for RNRB purposes when the surviving spouse's interest ends; (3) If the home passes to the surviving spouse under the spousal exemption and then to children on second death, the RNRB and transferred RNRB are claimed on the second death; (4) The will should not leave the home to a standard discretionary trust for children — the RNRB is unavailable. If discretionary trust planning is desired for other reasons (e.g. asset protection, protecting an inheritance for a minor), other assets should go to the discretionary trust and the home should pass outright or in an IPDI to the children.
Transferred RNRB between spouses and civil partners
Where the deceased did not use all of their RNRB (or used none of it — for example because the home passed to the surviving spouse under the spousal exemption on first death), the unused proportion of the RNRB can be transferred to the surviving spouse or civil partner (s8G IHTA 1984). This works similarly to the transferred NRB: the proportion of RNRB unused on the first death is applied to the RNRB available on the second death. Because the RNRB was zero until 2017–18, a surviving spouse where the first spouse died before 6 April 2017 can still claim 100% transferred RNRB on their own death — even if no RNRB existed at the date of first death. Maximum transferred RNRB: 100% of the survivor's RNRB (i.e. up to £175,000 transferred + £175,000 own = £350,000 RNRB on second death). Combined with two standard NRBs (2 × £325,000 = £650,000) the effective threshold on the second death is £650,000 + £350,000 = £1,000,000. Claim process: the transferred RNRB is claimed on form IHT402 (along with form IHT435 for the RNRB claim itself), submitted with the main IHT400 return on the second death.
Downsizing addition: preserving RNRB when the home is sold
If you sell, downsize, or give away your main home after 8 July 2015 (and before your death), you may still be entitled to the full RNRB via the downsizing addition (s8FA IHTA 1984). The downsizing addition conditions: (1) You owned a qualifying residential interest at some point on or after 8 July 2015; (2) That interest was disposed of (sold, given away, downsized); (3) At the date of death, you have other assets (not the original home) passing to direct descendants; (4) A downsizing addition claim is made on form IHT435. The downsizing addition equals the lower of (a) the RNRB that would have applied to the old home and (b) the value of other estate assets passing to direct descendants. The purpose is to ensure that downsizing for sensible reasons (moving into care, releasing equity, rightsizing) does not cause a loss of RNRB. The will must direct sufficient other assets to direct descendants for the downsizing addition to operate. Example: home sold for £300,000; RNRB £175,000. At death, cash estate (including proceeds) worth £500,000 passes to children by will. Downsizing addition = £175,000 (full RNRB), subject to the taper if the estate is above £2m.
Frequently Asked Questions
What is the Residence Nil-Rate Band (RNRB) in 2026?
The RNRB (s8D IHTA 1984) is an additional IHT threshold of £175,000 available where a main home (or share of one) passes to direct descendants (children, stepchildren, grandchildren). It is in addition to the standard NRB (£325,000). Single person: up to £500,000 total IHT-free. Married couple or civil partnership (both thresholds fully transferred): up to £1,000,000 total IHT-free. The RNRB is frozen at £175,000 until at least 2030. It tapers for estates above £2,000,000 (losing £1 for every £2 above), disappearing entirely at £2,350,000 (single) or £2,700,000 (couple).
How do I claim the Residence Nil-Rate Band?
The RNRB is claimed on form IHT435 (submitted with the IHT400 main return or, where no IHT400 is needed, separately). The basic requirement is that the qualifying residential interest (main home or share) passes to direct descendants under the will or intestacy. The will should not put the home into a standard discretionary trust — this disqualifies the RNRB. If using trust planning, an IPDI (life interest trust) for the surviving spouse with children as remaindermen preserves the RNRB. Transferred RNRB is claimed on form IHT402.
Does my estate qualify for the Residence Nil-Rate Band if I have no children?
No — if you have no direct descendants (children, grandchildren, etc.), the RNRB is not available. Your IHT threshold is limited to the standard NRB (£325,000 or up to £650,000 for a couple using transferred NRB). People with no direct descendants should consider other IHT planning: AIM BPR shares (after 2 years), annual gifting, charitable legacy (36% reduced rate), or whole-of-life insurance in trust.
What happens to the RNRB if my estate is over £2 million?
The RNRB tapers for estates above £2,000,000. For every £2 over £2m, the RNRB reduces by £1. At £2,350,000 (single) the RNRB is completely lost. For a couple, the combined RNRB (£350,000) is fully lost at £2,700,000. Strategies to keep the estate below £2m and preserve the RNRB: lifetime PETs (gifts to children, 7-year clock); AIM BPR portfolio (reduces taxable estate after 2 years); annual gifting (£3,000/yr); charitable legacy reducing the estate; review of estate composition. Every £2 preserved below £2m saves £1 of RNRB (worth £400 in IHT — 40% × £1,000).
Can I get the RNRB if I've sold my home before death?
Possibly — via the downsizing addition (s8FA IHTA 1984). If you owned a main home on or after 8 July 2015 and sold or downsized, the RNRB may still be available if: the old home would have qualified; other assets pass to direct descendants at death; a downsizing addition claim is made on form IHT435. The downsizing addition preserves the RNRB benefit for people who sold their home for sensible reasons (care needs, releasing equity, moving in with family). Update your will to ensure sufficient other assets pass to direct descendants to maximise the downsizing addition.
Make Sure Your Will Claims the Full RNRB
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