Residence Nil Rate Band (RNRB): rules & how to claim

25 min read

Last verified: February 2026 (England & Wales)

Quick-read summary

The Residence Nil Rate Band (RNRB) is an extra Inheritance Tax (IHT) allowance (up to £175,000 per person; up to £350,000 for a couple) when a home passes to direct descendants. It sits on top of the standard Nil Rate Band (£325,000), so many families can reach up to £1 million tax-free if both bands fully apply. The RNRB only applies on death (not to lifetime gifts), and it has moving parts: who inherits, which property counts, “downsizing” rules, and tapering above a £2 million estate. Getting the details right can save you a significant amount of tax.

Key terms (glossary)

RNRB (Residence Nil Rate Band)

An extra inheritance-tax allowance that can apply when a qualifying home passes to direct descendants.

Qualifying residential interest (QRI)

A home (or share of one) the person owned and lived in at some point. It does not have to be their last home, but it must be in their estate when they die (unless downsizing rules apply).

Direct descendants

Usually children, stepchildren, adopted children, and lineal descendants such as grandchildren. In some cases, it also includes the spouses/civil partners (and widows/widowers) of those descendants.

Closely inherited

The key test for RNRB. It is about who ultimately inherits the value of the home (or, in downsizing cases, equivalent value from the estate).

Net estate for the £2m taper

The estate’s value after liabilities, but before exemptions and reliefs are applied. This can catch people out.

Practical checklist (is this likely to apply?)

Death on or after 6 April 2017.
A qualifying home (or sale proceeds) is closely inherited by direct descendants (children, step-children, adopted children, grandchildren).
Maximum RNRB is £175,000 each (frozen at this level through 2030/31).
Unused RNRB can be transferred as a percentage to a surviving spouse/civil partner. If the first death was before 6 April 2017, it’s deemed to be £100,000 for the percentage calculation.
The £2 million taper reduces RNRB by £1 for every £2 the net estate exceeds £2m; taper can reduce it to zero.
RNRB applies to the death estate (not to lifetime transfers), and is applied before the standard Nil Rate Band when calculating IHT on the estate.
Downsized or sold the home? A downsizing addition may preserve relief.

What to consider (the moving parts, plainly)

1) Who counts as a “direct descendant”?

This usually includes children, stepchildren, adopted children, and lineal descendants such as grandchildren.

It can also include the spouses/civil partners (and widows/widowers) of those direct descendants.

RNRB is about the home being “closely inherited”, so the detail of who ultimately benefits (and how) matters.

2) What property qualifies?

A Qualifying Residential Interest is a residence the deceased owned and lived in at some point. Only one residence can be used for RNRB; the executors can nominate which one if there are several. If the property value is lower than the maximum RNRB, the claim is capped at that lower value.

How the home needs to pass (this is where Wills and trusts can accidentally break RNRB)

The home does not have to be gifted by a special clause. It can pass as part of the residue (what’s left after legacies).

RNRB can still apply even if the executors sell the home during administration and pass the sale proceeds to direct descendants.

Where people get caught out is the trust shape and timing. Very broadly:

• Outright to direct descendants (including via the residue): usually the cleanest route.
• Life interest-style structures: often used for two-death planning. RNRB is commonly not used on the first death if the survivor is the main beneficiary, but it can still be available later if the home ultimately passes to direct descendants on the second death.
• Discretionary trusts: RNRB is often at risk if the home (or its value) stays inside the discretionary trust long-term. In some cases it can be preserved if the trustees appoint the home (or equivalent value) to direct descendants within two years, but that must be handled correctly.
• Age conditions: if the Will says a child “inherits at 25” (so the home is held on trust first), the RNRB position needs checking. Some youth-beneficiary trust routes still work for RNRB; others can unintentionally switch it off.

This is why we always sanity-check RNRB when a Will contains trusts or age conditions.

3) If the home is worth less than the maximum RNRBRNRB is separate from the £325,000 nil-rate band. You can claim up to £175,000 per person, but only up to the value of the qualifying home or share left to direct descendants.

Examples
• Home value £100,000 → usable RNRB £100,000.
• Own 50% of a £100,000 home → usable RNRB £50,000.
• Transferable RNRB can be added from a late spouse, but the total used cannot exceed the property (or share) value, unless a downsizing addition applies.

4) Downsizing addition

If someone sold, downsized from, or gave away a home on or after 8 July 2015, RNRB is not automatically lost.

A downsizing addition may apply if:
• they once owned and lived in a qualifying home, and
• at death, they leave assets of equivalent value to direct descendants (even if they no longer own a qualifying home at death).

The calculation is technical. It looks at the amount of RNRB “lost” by no longer owning the home and limits any addition to what is actually closely inherited by direct descendants.

Practical point: keep records. Executors usually need dates, valuations, and evidence of what replaced the home value in the estate.

5) Transferable RNRB between spouses/civil partners

Any unused percentage of RNRB on the first death can be transferred and claimed on the second death (IHT435 and IHT436). If the first death occurred before 6 April 2017, both the unused amount and the total available are deemed to be £100,000 for the purpose of calculating the percentage.

6) The £2 million taper

If the net estate at death (assets minus liabilities) is over £2m, RNRB reduces by £1 for every £2 over the threshold. The taper can wipe out the RNRB entirely (e.g., around £2.35m with no debts). Note: The taper test examines the estate at death, not lifetime transfers; that’s why lifetime gifting can help preserve RNRB even if it doesn’t reduce IHT on those gifts.

7) Order of applying the bands

RNRB only applies on death (not to lifetime transfers that become chargeable on death).

In many estates, the order you apply RNRB and the main nil-rate band makes no practical difference. However, in some cases it can affect how much unused allowance is available to transfer to a spouse or civil partner.

8) Claims and paperwork

Executors claim the RNRB using IHT435, and any transferred RNRB using IHT436 (with evidence of the first death and calculations where needed).

Cases

Downsizing into care, then leaving investments to children

Margaret sold her home in 2020 when she moved into supported living. At death, she no longer owned a qualifying home, but she did leave a portfolio of investments to her children.

Her executors were still able to explore a downsizing addition because the home was disposed of after 8 July 2015 and the estate still passed equivalent value to direct descendants. The key was having clear paperwork and valuations for the earlier property and the disposal.

Discretionary trust trap: “it’s all for the family anyway”

Paul’s Will left his share of the home into a discretionary trust for “my wife and my children”, assuming this would keep everything flexible.

Because no one inherited the home outright at death, RNRB was at risk. The trustees then had to consider whether an appointment to the children within two years was needed if preserving RNRB mattered in that family’s tax picture.

Age-condition trap: “they inherit at 25”

Sophie left her estate to her children, but only if they reached 25. Until then, everything was held on trust.

That age condition was protective, but it meant the RNRB position needed checking. Some youth-beneficiary trust routes can still keep RNRB on track. Other structures can unintentionally switch it off, which is why older Wills with age gifts often need a focused review.

Taper trap: “just over £2m can wipe most of it out”

Mrs Evans dies in 2025. Her estate totals £2.30m after liabilities and includes a home left to her children.

The RNRB maximum is £175,000.
Her estate exceeds the £2m taper threshold by £300,000, so taper reduces the RNRB by £150,000 (£300,000 ÷ 2).
Her available RNRB is £25,000.

If Mrs Evans had gifted £300,000 more than seven years earlier (so it would be outside the estate and outside any chargeable lifetime transfers on death), her estate would have been under £2m, and the full £175,000 RNRB could have applied. (Gifting can preserve RNRB because the taper test focuses on the net estate at death, not earlier gifts.)

Pre-2017 first death trap: “deemed £100,000 for the percentage”

Mr Patel died in 2016 (before RNRB existed). For transfer purposes, his RNRB is deemed to be £100,000; if nothing in his estate would have used it, 100% is available to transfer to Mrs Patel’s estate on her later death (subject to tapering when she dies).

FAQs

1) Do I need to leave the home outright to my children?

Not always. Certain trust routes still qualify if the value is “closely inherited” by direct descendants. The detail matters: some discretionary trusts won’t qualify unless an appointment is made within two years (s.144 IHTA), whereas life interest/flexible life interest trusts can.

2) What if I sold my home before I died?

You may still be eligible for an RNRB downsizing addition if the sale/gift/downsizing occurred after 8 July 2015 and assets of equivalent value pass to direct descendants. Keep the paperwork; the calculation looks at the “lost relievable amount”.

3) How does the £2m taper actually work?

RNRB reduces by £1 for every £2 the net estate exceeds £2m. At around £2.35m (with no debts), RNRB is usually reduced to zero. Planning can include lifetime gifts to bring the estate below £2m, recognising that gifts have their own Inheritance Tax (IHT) rules.

4) My spouse died before 2017 — is anything transferable?

Yes. The unused percentage can be transferred. Where the first death occurred before 6 April 2017, the calculation assumes £100,000 was available; therefore, if none was used, 100% can be transferred (subject to tapering at the second death).

5) Which band is used first in the estate calculation?

RNRB comes off the death estate before the general Nil Rate Band; RNRB does not apply to lifetime gifts that become chargeable on death.

6) How do I claim it?

Executors use IHT435 (RNRB) and IHT436 (transferable RNRB) when submitting the IHT forms. We can help gather the evidence and calculate any downsizing addition.

Optional Technical Notes (for those who want the detail…)

Legislation: RNRB sits in IHTA 1984 ss.8D–8M. RNRB is an “extra nil-rate amount” if a qualifying residential interest is closely inherited; the taper is in s.8D(5) (£1 for every £2 over £2m).
Phasing and current amount: Introduced 2017/18 at £100k and increased to £175k from 2020/21; frozen through 2030/31.
Taper mechanics: Apply the adjusted allowance after comparing the net estate with the £2m taper threshold; the allowance can be entirely removed.
Transfer percentage (not amount): For pre-2017 first deaths, the deemed RNRB is £100k; calculate the unused percentage, then apply it to the maximum at the second death.
Downsizing addition: Available where a qualifying residential interest was owned and occupied but has been disposed of, with assets left to direct descendants; calculation uses the lost relievable amount.
Forms: IHT435 (RNRB) and IHT436 (transfer).

Sources & further reading

Same list as plain URLs (for Site123 link tool copy/paste):

Next steps

RNRB can deliver substantial savings — but it’s easy to lose through the taper, the wrong will structure, or timing around downsizing. If your estate is worth approximately £2m, or your will contains trusts, have us run the numbers and verify the structure against the relevant rules. We’ll confirm eligibility, calculate any taper or downsizing addition, and coordinate the right claims for your executors.

This article is general information only, not individual advice.
If you’d like help applying this to your circumstances, we can guide you through the options.

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