Residence Nil-Rate Band (RNRB) Explained UK: £175K IHT Allowance 2026

What is Residence Nil-Rate Band?

The Residence Nil-Rate Band (RNRB) was introduced in April 2017 to help families pass on the family home without Inheritance Tax.

Who Qualifies for RNRB?

To qualify for the full Residence Nil-Rate Band, ALL these conditions must apply:

1. You Owned a Home

The deceased must have owned a home (or share of a home) at the time of death. This includes:

• House, flat, apartment
• Share of jointly owned property
• Formerly owned home (if downsized after 8 July 2015 - see downsizing relief below)

Learn more about what happens to property after death.

2. Home Passes to Direct Descendants

"Direct descendants" means:

• Children (including adopted, step-children, foster children)
• Grandchildren
• Great-grandchildren
• The spouse or civil partner of a descendant. This includes the widow, widower or surviving civil partner of a descendant who died first, provided they have not since remarried or formed a new civil partnership (HMRC manual IHTM46013)

Does NOT include:

• Siblings
• Nieces and nephews
• Friends
• Unmarried partners
• Charities

3. Estate Under £2 Million

If the estate exceeds £2 million, the RNRB is gradually reduced (see taper section below).

How Much RNRB Can You Claim?

The £2 Million Taper

If the estate exceeds £2 million, the RNRB is reduced by £1 for every £2 the estate exceeds the threshold.

Transferable RNRB: Claiming Your Late Spouse's Allowance

If your spouse or civil partner died before you, you may be able to claim their unused RNRB - even if they died before RNRB was introduced in 2017.

When Can You Claim Transferable RNRB?

You can claim unused RNRB if:

• Your spouse/partner died before you
• They didn't use their RNRB (e.g., left everything to you, not children)
• They died before 2017 (RNRB didn't exist yet - 100% unused)

Amount you can claim:

• Up to 100% of late spouse's unused RNRB (£175,000 if completely unused)
• YOUR RNRB (£175K) + THEIR unused RNRB (up to £175K) = up to £350,000

Downsizing Relief

If you downsized or sold your home after 8 July 2015, you may still claim RNRB through "downsizing relief" - even if you don't own a property when you die.

When Does Downsizing Relief Apply?

You can claim if:

• You owned a home after 8 July 2015
• You downsized to smaller property, OR
• You sold property and moved to care home, OR
• You sold property for any reason
• You left assets of equivalent value to direct descendants (cash, investments, etc.)

How RNRB Combines with Standard Nil Rate Band

RNRB works alongside the standard Nil Rate Band (£325,000) to increase your total tax-free allowance:

How to Claim RNRB

RNRB is claimed through Inheritance Tax forms when applying for probate.

Forms Required

• IHT435: Main RNRB schedule (submitted with the IHT400). For an excepted estate that reports its figures within the probate application, the RNRB is applied without this schedule.
• IHT436: If claiming transferable RNRB from late spouse

Information Needed

• Property address and value at death
• How property was owned (sole/joint)
• Who inherited the property (children's names)
• Whether property was main residence
• Downsizing details if applicable
• Late spouse's details if claiming transferable RNRB

What Affects Whether the RNRB Is Available

1. What the will says about the home

The RNRB only applies where the residence is inherited by a direct descendant. What determines whether it is:

• A home left outright to children or grandchildren is closely inherited, so the RNRB applies on that death
• A home left to a spouse or civil partner — outright or through a life interest trust — is not closely inherited, so no RNRB is available on the first death. The allowance is not lost: the unused proportion transfers, and can be claimed on the second death if the home then passes to descendants
• Where only part of the home passes to descendants, the RNRB is limited to the value of that share

2. The size of the estate

The taper works off the net estate at death, so anything that reduces that figure — lifetime gifts made more than seven years earlier, exempt gifts to charity, or a policy written in trust so the proceeds fall outside the estate — affects how much RNRB survives the taper. The annual gift exemption is £3,000.

3. Records where a home has been sold

A downsizing addition is claimed by the personal representatives, and the relevant records are the value of the former home, the date it was disposed of (it must be after 8 July 2015), and what passed to direct descendants instead.

RNRB and Other Reliefs

RNRB works alongside other Inheritance Tax reliefs:

• Spouse exemption: Unlimited transfers to spouse (but doesn't use RNRB)
• Business Property Relief: from 6 April 2026, 100% relief on the first £2.5m of property qualifying for 100% BPR or APR (combined), and 50% above that
• Agricultural Property Relief: shares the same £2.5m 100% allowance as BPR; any unused part can be transferred to a surviving spouse or civil partner
• Charity exemption: Gifts to charity fully exempt

Frequently Asked Questions

Can I claim RNRB if I leave my home to my spouse?

No, but you don't lose it. Your unused RNRB transfers to your spouse. When your spouse dies and leaves the home to your children, they can claim BOTH RNRB allowances (up to £350,000).

What if I own a share of a property with my sibling - can I still claim RNRB?

Yes, RNRB applies to your share of the property if it passes to your children. If your share is worth less than £175K, your RNRB is limited to that share value.

Can I claim RNRB if my child died before me?

Yes, if you leave the property to your grandchildren (your deceased child's children). The property can pass "down" a generation and still qualify.

What if I have more than one property?

The RNRB applies to one residence only. Where the estate includes more than one dwelling-house the deceased lived in, section 8H(4) of the Inheritance Tax Act 1984 requires the personal representatives to nominate one (and only one) of them. There is no separate deadline for the nomination itself, but a claim for a transferred allowance or a downsizing addition must be made within 2 years of the end of the month in which the death occurred (section 8L).

Does RNRB apply to property abroad?

It depends on the deceased's tax status. For deaths on or after 6 April 2025, HMRC's manual IHTM46032 says that where the deceased was a long-term UK resident it does not matter where the residence is located, so a home abroad can qualify. Where they were not a long-term UK resident, the residence must be situated in the UK. For earlier deaths the same test ran on UK domicile rather than long-term residence.