The residence nil rate band is an additional Inheritance Tax allowance of up to £175,000 when a qualifying home passes to direct descendants. It is separate from the ordinary £325,000 nil rate band. The home share inherited, estate value and any transferred allowance affect the result; £500,000 is a possible combined threshold, not an automatic allowance for every estate.
Keep these three Inheritance Tax figures separate
Figure | What it refers to |
£325,000 | Ordinary nil rate band, before considering transfers or other rules. |
Up to £175,000 | Residence nil rate band, subject to qualifying-home and inheritance conditions. |
£2 million | Estate-value threshold above which the residence allowance tapers; not a general tax-free allowance. |
Does an estate worth less than £500,000 automatically avoid tax?
No. The combined figure assumes the full ordinary and residence allowances are available. The home must qualify and pass in the required way, and gifts or other circumstances may affect the calculation. Work out the estate’s own allowances before treating £500,000 as its threshold.
Do I use today’s allowance for a death in 2021 or 2022?
Use the rules for the date of death. The maximum residence nil rate band was £175,000 in both 2021–22 and 2022–23, but eligibility, transfers and estate values still need checking for that death. A current worked example does not replace the historical facts.
Official help and next steps
HMRC warns that the residence allowance must not be used to decide whether an estate is excepted from a full account. Check the reporting route even if the eventual tax is nil. HMRC: borderline excepted estates and reporting
If beneficiaries are considering changing who receives the home, take advice before signing a variation. Deed of variation: conditions and timing
Use HMRC’s method and calculator rather than treating an example as your assessment: HMRC: work out and apply the residence nil rate band
Which facts decide whether the home allowance applies?
Check whether the person owned a qualifying home, who inherits it and the value of the relevant share. Then check the estate value for tapering and whether unused allowance from a spouse or civil partner is available. Downsizing and trust arrangements need their own checks; a single property valuation cannot answer all of these questions.
Simplified taper example
Assume a qualifying estate of £2.1 million, a sufficient home share passing to direct descendants and no transferred residence allowance. The £100,000 above £2 million reduces the £175,000 allowance by £50,000, leaving £125,000. This illustrates the taper only; it is not the final tax calculation or a statement that every £2.1 million estate qualifies.
Do not deduct exemptions before testing the taper
HMRC’s taper calculation uses the estate value on its specified basis. It is not simply the amount left after spouse exemption or business relief. Keep the valuation used for tapering separate from the later taxable-estate calculation and ask for advice if ownership or reliefs are complex.
Choose the next step you need
See the wider Inheritance Tax calculation
Check who inherits when there is no will
What is the residence nil rate band?
The residence nil rate band (RNRB), sometimes called the main residence nil rate band, the home allowance or the "additional threshold", was introduced for deaths on or after 6 April 2017 by section 8D of the Inheritance Tax Act 1984. It started at £100,000 and rose in steps to £175,000 from the 2020 to 2021 tax year, where it has stayed since.
It works alongside the ordinary nil rate band, the £325,000 slice of an estate on which no Inheritance Tax is charged. According to GOV.UK's Inheritance Tax guide, the standard rate on the part of an estate above the available thresholds is 40%. Put the two allowances together and one person can pass on up to £500,000 before any tax is due, provided their home goes to direct descendants. Our guide to Inheritance Tax in the UK covers the wider rules, gifts and reliefs; this page goes deeper on the home allowance itself.
Inheritance Tax is UK-wide law, so the residence nil rate band works the same way in England, Wales, Scotland and Northern Ireland. What differs between the nations is the probate process and the rules of succession that decide who inherits, which can affect whether a home ends up with direct descendants at all.
How long are the nil rate band and residence nil rate band frozen?
Both allowances are frozen until 5 April 2031. The government's Inheritance Tax thresholds policy paper of 26 November 2025 confirmed that the nil rate band (£325,000), the residence nil rate band (£175,000) and the residence nil rate band taper threshold (£2 million) stay at their current levels until the end of the 2030 to 2031 tax year. That extension is now law through section 72 of the Finance Act 2026, which extends the freeze in section 86 of the Finance Act 2021 to cover 2030 to 2031.
The £325,000 nil rate band has been unchanged since 6 April 2009, as HMRC's table of Inheritance Tax thresholds shows. Because property prices and savings tend to rise while the thresholds stand still, more estates come close to the limits each year.
Who counts as a direct descendant?
The allowance only applies to the part of the home that is "closely inherited". HMRC's residence nil rate band guidance lists who qualifies:
children, grandchildren and other lineal descendants
stepchildren, adopted children and foster children
children for whom the person who died was a guardian or special guardian while they were under 18
the spouse or civil partner of any of these, including their widow, widower or surviving civil partner
Nephews, nieces, brothers and sisters are not direct descendants, so a home left to them does not attract the allowance. The same guidance explains that a home left into certain trusts may not qualify either. If descendants only become entitled after meeting a condition, such as reaching a particular age, the allowance does not apply. Other trusts can qualify, so this is one area where a solicitor or regulated adviser earns their fee.
What counts as a home for the allowance?
HMRC's guide to checking whether you can get the additional threshold says the person who died must have owned the property and lived in it at some point. It does not have to have been their home at the date of death. A buy-to-let they never lived in will not qualify, and only one property can be used. If they owned more than one home they had lived in, the executor chooses which one to nominate.
The allowance is capped at the value of the home, or of the share that passes to direct descendants. If the person who died only owned a share of the property, only their share counts. For example, if a parent's half-share in a house is worth £120,000 and it goes to their children, the residence nil rate band for that estate is limited to £120,000, not the full £175,000, unless a downsizing addition applies.
What happens to the residence nil rate band on estates over £2 million?
For larger estates the allowance is tapered away. The HMRC guidance explains that it is reduced by £1 for every £2 that the estate is worth more than the £2 million taper threshold. The taper is measured on the whole estate, not just on the house: all assets minus debts, without deducting exemptions such as the spouse exemption or reliefs such as business property relief.
Here is how the taper works with today's figures. An estate worth £2.1 million is £100,000 over the threshold, so the £175,000 allowance falls by £50,000, to £125,000. An estate worth £2.35 million or more loses the single £175,000 allowance completely. Where a surviving spouse or civil partner also has a transferred allowance (see below), their total home allowance of up to £350,000 is tapered in the same way, so it disappears entirely once their estate reaches £2.7 million.
This matters more from 2027. Under section 66 of the Finance Act 2026, which section 71 applies to deaths on or after 6 April 2027, most unused pension funds and pension death benefits will count as part of the estate. The government's policy paper on unused pension funds confirms that death-in-service benefits from registered pension schemes are excluded. For some families, a large pension pot added to the estate could push the total over £2 million and start the taper. Our guide to what happens to a pension when someone dies explains the wider rules.
Can you transfer an unused residence nil rate band to a spouse or civil partner?
Yes. If the first spouse or civil partner to die did not use all of their residence nil rate band, often because they left everything to the survivor, the unused percentage can be added to the survivor's own allowance. HMRC's guidance on transferring the threshold stresses that it is the unused percentage that transfers, not a fixed amount, and that the transferred percentage is limited to 100%.
The percentage is applied to the allowance in force when the survivor dies. If the first partner died before 6 April 2017, when the allowance did not yet exist, HMRC's Inheritance Tax Manual (IHTM46040) treats their allowance as 100% unused, unless their own estate was over £2 million and the taper applies. The ordinary £325,000 nil rate band can be transferred in the same way, and the two percentages are worked out separately.
A worked example with today's figures: a widow dies leaving an estate of £900,000, including a home worth £450,000 that passes to her two children. Her husband died earlier and left everything to her, so both of his allowances are fully unused. Her estate can use £325,000 + £325,000 + £175,000 + £175,000 = £1,000,000 of thresholds, and no Inheritance Tax is due. Without the home going to the children, only £650,000 would be available.
What is the downsizing addition?
People sometimes sell a family home to move somewhere smaller, into care, or to live with relatives. The downsizing addition protects the allowance in those cases. According to HMRC's guidance on how downsizing, selling or gifting a home affects the threshold, it can apply if the person sold, gave away or downsized to a less valuable home on or after 8 July 2015, the former home would have qualified had they kept it, and their direct descendants inherit at least some of the estate.
The addition is usually the amount of allowance lost through the move, but it cannot be more than the value of other assets left to direct descendants, and the total cannot exceed the maximum allowance that would otherwise have been available. Keep sale completion statements and valuation evidence for the earlier home: the executors will need dates and values to make the claim.
How do executors claim the residence nil rate band?
The allowance is not automatic. The executor or administrator has to claim it as part of the Inheritance Tax paperwork, even where no tax ends up being due. HMRC's guidance on the additional threshold points to these forms:
IHT435, sent with the full IHT400 account, to claim the estate's own residence nil rate band and any downsizing addition.
IHT436, to claim any unused residence nil rate band transferred from a spouse or civil partner who died earlier.
IHT402, used with IHT400, to transfer any unused standard nil rate band.
There is a time limit. Under section 8L (transferred allowance and downsizing) and section 8B (transferred nil rate band) of the Inheritance Tax Act 1984, a claim must normally be made within two years of the end of the month in which the person died, or within three months of the personal representatives first acting, if that is later. HMRC can allow longer in some cases. If a transferred allowance is involved, start looking early for the first partner's will and a record of what they left and to whom, ideally while you apply for probate, because those details can be hard to find years later.
Frequently asked questions: Residence nil rate band
Is the residence nil rate band £175,000 in 2026?
Yes. The maximum residence nil rate band for deaths in the 2026 to 2027 tax year is £175,000 per person, and it is frozen at that level until 5 April 2031 under the Finance Act 2026.
Can I get the residence nil rate band if I leave my home to my nephew?
No. Nephews, nieces, brothers and sisters are not direct descendants, so the home allowance does not apply. The standard £325,000 nil rate band is still available.
Does the residence nil rate band apply if I have no children?
Check who inherits, not simply whether you have living biological children. Qualifying descendants can include grandchildren, stepchildren, adopted children and certain other children under HMRC’s rules. If no qualifying descendant inherits in the required way, the home allowance is unavailable on that death, though a surviving spouse or civil partner may be able to claim a transfer later.
Can a deed of variation help secure the residence nil rate band?
Sometimes. If a will leaves the home to someone who does not qualify, beneficiaries can redirect an inheritance within two years of the death using a deed of variation, the time limit set by section 142 of the Inheritance Tax Act 1984. Take advice before signing, because the change has to meet strict conditions.
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