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Residence Nil-Rate Band (RNRB) Explained UK: £175K IHT Allowance 2025
By Farra Editorial Team•5 min read•Last updated: 27 January 2026
What is the Residence Nil-Rate Band (RNRB)?
1The RNRB is an additional £175,000 inheritance tax allowance (frozen until 2030) on top of the standard £325,000 nil-rate band, giving £500,000 per person.
2It applies only when the deceased's home passes to direct descendants — children, grandchildren, stepchildren, or adopted children. Siblings and nieces/nephews do not qualify.
3Unused RNRB can be transferred to a surviving spouse or civil partner, allowing couples to pass on up to £1 million free of IHT.
4The allowance tapers by £1 for every £2 the estate exceeds £2 million and is eliminated entirely at £2.35 million.
5Claimed via form IHT435; if claiming a late spouse's unused RNRB, form IHT436 is also required.
RNRB = additional £175,000 IHT allowance when passing home to children/grandchildren (on top of £325,000 standard). Total per person: £500,000. Couples: £1,000,000 combined. Requirements: owned home, passed to direct descendants (children, grandchildren including adopted/step/foster), estate under £2m (tapers above, lost at £2.35m). Claim via IHT435. Frozen until 2030. Transferable between spouses.
Amount: £175,000 additional allowance (frozen until 2030)
Total allowance: £500K per person, £1m per couple (includes £325K standard)
Who qualifies: Home passed to children/grandchildren (includes adopted/step/foster)
Taper: Reduces if estate over £2m, lost at £2.35m
Claim: Form IHT435 with probate application
Transferable: Unused RNRB transfers to spouse (form IHT436)
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.
Key Facts About RNRB
• £175,000 additional allowance (2026/27, frozen until 2030)
• In addition to standard £325,000 Nil Rate Band
• Total per person: £500,000 (£325K + £175K)
• Couples: £1,000,000 combined (£650K + £350K)
• Only applies when passing home to children/grandchildren
• Tapers down for estates over £2 million
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)
• £2.35m+ estate: No RNRB (completely tapered away)
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
Example: Transferable RNRB
• Husband died 2015, left everything to wife (no RNRB as not introduced yet)
• Wife dies 2024, leaves £800K home to children
• Can claim: Wife's RNRB (£175K) + husband's unused RNRB (£175K) = £350K total RNRB
• Combined with standard NRB (£650K) = £1m tax-free
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.)
Example: Downsizing Relief
• Sold £400K home in 2020
• Moved to care home (no property owned at death)
• Died 2024 with £300K estate (cash/investments), left to children
• RNRB would have been £175K (full amount for old home)
• Actual RNRB = £0 (no property now)
• Downsizing relief: £175K (can still claim full RNRB)
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RNRB works alongside the standard Nil Rate Band (£325,000) to increase your total tax-free allowance:
Allowance
Single Person
Married Couple
Standard Nil Rate Band
£325,000
£650,000
Residence Nil Rate Band
£175,000
£350,000
TOTAL TAX-FREE
£500,000
£1,000,000
How to Claim RNRB
RNRB is claimed through Inheritance Tax forms when applying for probate.
Forms Required
IHT435: Main RNRB schedule (included with IHT400 or IHT205)
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
Maximizing RNRB Through Estate Planning
1. Update Your Will
Ensure your will explicitly leaves your home to children or grandchildren:
If married: Can leave to spouse first, then children on second death
Use "mirror wills" for couples (both leave home to each other, then children)
Consider life interest trust if want spouse to live in home but children to inherit
2. Keep Estate Under £2 Million
To avoid RNRB taper:
Make lifetime gifts (use annual £3K exemption)
Give to charity (charitable gifts reduce estate)
Spend down estate
Consider life insurance written in trust (outside estate)
3. Downsizing Protection
If planning to downsize or move to care home:
Keep records of property values
Ensure downsizing after 8 July 2015 to qualify
Leave equivalent value to children
Common Mistakes to Avoid
• Leaving home to siblings/nieces (no RNRB - must be children)
• Not claiming transferable RNRB from late spouse
• DIY will that doesn't mention children inheriting home
• Assuming children automatically inherit (may go to spouse under intestacy)
• Not planning for £2m taper if estate close to threshold
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: 100% relief on business assets
Agricultural Property Relief: 100% relief on farms
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?
RNRB applies to your main residence only. If you own multiple properties, executors can nominate which property to use for RNRB within 2 years of death (usually choose the most valuable).
Does RNRB apply to property abroad?
Yes, RNRB can apply to foreign property if it was your main residence and passes to direct descendants. Complex rules apply - seek specialist advice.
Quick Summary
✓ £175,000 extra allowance when passing home to children
✓ £500,000 total per person (£325K + £175K)
✓ £1 million for couples (both allowances combined)
✓ Must pass to children/grandchildren (not siblings)
✓ Tapers for estates over £2m
✓ Transferable from late spouse (even if died pre-2017)
✓ Downsizing relief available if sold home after 2015
1 in 3 probate applications are sent back. IHT errors are the most common reason.
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