An extra £175,000 tax-free allowance on your home — on top of the standard £325,000 nil rate band. Married couples can combine allowances to shelter up to £1 million from inheritance tax. But it must be actively claimed.
The Residence Nil Rate Band (RNRB) is an additional inheritance tax allowance introduced in April 2017. It provides an extra £175,000 per person on top of the standard £325,000 nil rate band — but only when a qualifying residential property is left to direct descendants such as children or grandchildren.
Unlike the standard nil rate band, the RNRB is not applied automatically. Executors must actively claim it during probate using HMRC Form IHT435. Estates that miss this step lose the allowance entirely — even if they would otherwise qualify. The allowance also tapers away for estates worth more than £2 million.
The RNRB works alongside the standard nil rate band — not instead of it. Here is how the allowances stack up for individuals and couples.
The standard IHT threshold that applies to every individual estate — covering cash, investments, and all other assets.
The additional allowance introduced in 2017 that applies specifically to your main residence when left to direct descendants.
A single person can shelter up to £500,000 from IHT when the standard NRB and RNRB are combined — provided the home passes to direct descendants.
Married couples and civil partners can transfer unused allowances, potentially sheltering up to £1 million from IHT between them.
All three conditions must be satisfied for the RNRB to apply. Missing any one of them means the allowance cannot be claimed.
The property must have been the deceased's actual residence at some point — it is referred to as a "qualifying residential interest". A buy-to-let property that the deceased never lived in does not qualify, even if it is the most valuable asset in the estate.
Note: If you have downsized or moved into care, downsizing relief may still allow you to claim — see the downsizing section below.
The RNRB only applies when the qualifying property is left to direct descendants. This includes children (biological, adopted, foster, and step), grandchildren, and great-grandchildren. Leaving the property to a sibling, niece, nephew, or friend disqualifies the allowance entirely.
Note: Stepchildren are treated exactly the same as biological children by HMRC — the RNRB applies equally.
The RNRB is not applied automatically. Executors must claim it during probate by completing the correct HMRC forms. If the forms are not submitted, the allowance is lost — even if the estate would otherwise qualify.
Note: Your executor needs to complete Form IHT435 (and IHT436 if claiming a transferred allowance from a deceased spouse).
The definition of "direct descendant" is broader than many people expect — but it has clear limits. Getting this right in your will is essential.
Biological, adopted, and foster children all qualify
Treated identically to biological children by HMRC
Including step-grandchildren and adopted grandchildren
And further lineal descendants
Brothers and sisters do not qualify
Collateral relatives are excluded
Non-family beneficiaries are excluded
Charitable gifts do not attract RNRB
Trusts and the RNRB: If your will leaves the property to a trust rather than directly to a child, the RNRB may be lost. Bare trusts for direct descendants generally preserve the allowance, but discretionary trusts typically do not. Always take specialist advice if your will uses a trust structure.
The RNRB is progressively withdrawn for larger estates. For every £2 the net estate exceeds £2 million, the RNRB reduces by £1.
| Net Estate Value | Excess Over £2m | RNRB Reduction | RNRB Available | Total IHT-Free |
|---|---|---|---|---|
| £2,000,000 | £0 | £0 | £175,000 | £500,000 |
| £2,100,000 | £100,000 | £50,000 | £125,000 | £450,000 |
| £2,350,000 | £350,000 | £175,000 | £0 | £325,000 |
| £2,500,000 | £500,000 | £175,000 (fully tapered) | £0 | £325,000 |
Important: The taper is based on the net estate value — after deducting debts and liabilities but before applying any IHT reliefs. For couples, the taper applies to the surviving spouse's estate, which may include assets inherited from the first spouse.
Selling or downsizing your home does not automatically mean losing the RNRB. Downsizing relief protects those who moved to a smaller property or into care on or after 8 July 2015.
If you sold a larger home and bought a smaller one on or after 8 July 2015, and the smaller property (or other assets) passes to direct descendants, you can still claim the RNRB based on the value of the original property.
If you sold your home to fund care home fees on or after 8 July 2015, and other assets of equivalent value pass to direct descendants, downsizing relief allows the RNRB to still be claimed.
If you gave your home away during your lifetime on or after 8 July 2015 and other assets pass to direct descendants, downsizing relief may apply — but specialist advice is essential as the rules are complex.
Downsizing relief only applies to disposals on or after 8 July 2015. If the property was sold before this date, downsizing relief is not available and the RNRB cannot be claimed on that basis.
Unused RNRB from the first spouse to die can be transferred to the survivor's estate. This is how couples can reach the £1 million IHT-free threshold.
If the first spouse to die leaves everything to the surviving spouse (as most couples do), the RNRB is unused at that point. The full unused allowance — 100% of the RNRB — is transferred to the survivor's estate.
Survivor can claim 200% of the RNRB (£350,000 total)
If the first spouse's estate used some of the RNRB (e.g. leaving the property to a child), only the unused percentage transfers. Form IHT436 is used to calculate and claim the transferred amount.
Survivor claims the remaining unused percentage
When both the NRB and RNRB are fully transferred, the surviving spouse's estate can shelter up to £1 million from IHT — £650,000 NRB plus £350,000 RNRB — provided the home passes to direct descendants.
£1,000,000 total IHT-free threshold
Will structure is critical for couples
To maximise the combined £1 million threshold, both wills must be structured correctly. The surviving spouse must leave the qualifying property to direct descendants — not to another trust or non-qualifying beneficiary. Review your wills with a solicitor to confirm the RNRB will be preserved.
The RNRB must be actively claimed during probate. Follow these six steps to ensure the allowance is not lost.
Obtain a professional valuation of all assets — property, investments, cash, personal possessions, and any jointly held assets. The total net estate value determines whether the taper applies.
Confirm which property qualifies as the deceased's main residence. If multiple properties exist, only one can qualify. If the home was sold before death, check whether downsizing relief applies.
Check the will to confirm the qualifying property passes to a direct descendant. If the property passes to a trust, specialist advice is needed — some trust structures preserve the RNRB, others do not.
Form IHT435 is the HMRC form used to claim the Residence Nil Rate Band. It must be submitted as part of the probate process. The form requires details of the qualifying property and the beneficiary.
If the deceased was a surviving spouse or civil partner and the first spouse's RNRB was unused or only partially used, Form IHT436 is required to transfer the unused allowance.
Forms IHT435 and IHT436 are submitted alongside the main IHT400 inheritance tax return. Ensure all valuations and beneficiary details are accurate — errors can delay probate and trigger HMRC enquiries.
The RNRB is not automatic — it must be claimed
Many executors are unaware that the RNRB requires a separate claim. If Form IHT435 is not submitted, HMRC will not apply the allowance and the estate will pay more inheritance tax than necessary. If you are an executor, ensure your probate solicitor is aware of the RNRB and confirms it has been claimed.
The Residence Nil Rate Band (RNRB) is an additional inheritance tax allowance introduced in April 2017. It provides an extra £175,000 per person on top of the standard £325,000 nil rate band, but only when a qualifying residential property is left to direct descendants. For a single person, the combined allowance is £500,000. For a married couple or civil partners, the combined allowance can reach £1 million.
No. The RNRB is not applied automatically — executors must actively claim it during probate by completing HMRC Form IHT435. If the form is not submitted, the allowance is lost even if the estate would otherwise qualify. If a transferred allowance from a deceased spouse is also being claimed, Form IHT436 must also be completed.
Direct descendants include children (biological, adopted, foster, and step), grandchildren, great-grandchildren, and their spouses or civil partners. Stepchildren are treated identically to biological children. The RNRB does not apply if the property passes to siblings, nieces, nephews, friends, or charities.
The RNRB tapers away for estates valued over £2 million. For every £2 the net estate exceeds £2 million, the RNRB reduces by £1. This means the RNRB is completely withdrawn for estates worth £2.35 million or more (for a single person). For couples, the taper applies to the combined estate of the surviving spouse.
Yes, in many cases. Downsizing relief allows the RNRB to be claimed even if the qualifying property was sold or downsized on or after 8 July 2015, provided other assets of equivalent value pass to direct descendants. This protects people who move to smaller properties or into residential care from losing the allowance.
No. The RNRB only applies to a property that was the deceased's actual home — a qualifying residential interest. A buy-to-let property that the deceased never lived in does not qualify, regardless of its value. Only the property (or former property) that was the deceased's main residence can attract the RNRB.
This depends on the type of trust. Leaving property to a bare trust for direct descendants generally preserves the RNRB. However, leaving it to a discretionary trust typically does not qualify. If your will uses a trust structure, specialist advice is essential to ensure the RNRB is not inadvertently lost.
The two allowances work independently. The standard nil rate band (£325,000) applies to the overall estate — cash, investments, property, and all other assets. The RNRB (£175,000) applies specifically to the qualifying residential property. Both can be used simultaneously, giving a single person a combined IHT-free threshold of £500,000.
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