The Residence Nil Rate Band (RNRB) is the most important inheritance tax development of the last decade for UK homeowners with families. Introduced in 2017, it adds up to £175,000 per person of IHT-free allowance on top of the standard £325,000 nil-rate band — but only when the family home passes to direct descendants. A married couple with a family home can shelter up to £1 million combined from IHT using both allowances. This guide explains what the RNRB is, who qualifies, the tapering for large estates, and how to make sure your will captures the benefit.
Key takeaways:
- The Residence Nil Rate Band (RNRB) is an additional inheritance tax allowance of up to £175,000 per person (2026 rate, frozen until 2028).
- It applies only where a "qualifying residential interest" — usually the family home — passes to direct descendants (children, grandchildren, stepchildren, adopted children).
- The standard nil-rate band (£325,000) plus the RNRB (£175,000) gives a single person up to £500,000 IHT-free if the home passes to descendants.
- A married couple can transfer unused allowances to the survivor, giving a combined threshold of up to £1,000,000.
- The RNRB tapers off for estates over £2 million — losing £1 for every £2 over the threshold; gone entirely above £2.35 million (single) or £2.7 million (couple's combined).
What the RNRB actually is
The standard inheritance tax nil-rate band has been £325,000 per person since 2009 — frozen for over 15 years. As property prices rose, families with no other significant assets started to face inheritance tax bills just because they owned a home.
The RNRB was the government's response. Introduced in April 2017 and increased to £175,000 by April 2020, it provides additional IHT-free allowance specifically tied to passing a home to direct descendants. The intention: prevent the family home becoming the trigger for IHT.
The RNRB sits on top of the standard nil-rate band. For a single person whose estate includes a qualifying home and direct descendants:
| Allowance | 2026 amount |
|---|---|
| Nil-rate band | £325,000 |
| Residence nil-rate band | £175,000 |
| Combined | £500,000 |
For a married couple where both allowances pass to the survivor:
| Allowance | 2026 amount |
|---|---|
| Combined nil-rate band | £650,000 |
| Combined residence nil-rate band | £350,000 |
| Combined | £1,000,000 |
Who qualifies — the basic conditions
To claim the RNRB:
### 1. There must be a "qualifying residential interest"
A property the deceased owned and lived in at some point as their main residence. Investment properties, holiday lets and properties never used as a home don't qualify.
### 2. The interest must pass to direct descendants
"Direct descendants" includes:
- Children (biological, adopted, fostered, stepchildren)
- Grandchildren and great-grandchildren (and further down the line)
- Spouses or civil partners of any of the above, including widowed spouses
- It does NOT include nieces, nephews, siblings, parents, or unrelated friends
### 3. The descendant must inherit the interest, not just be a beneficiary
The home must pass to the descendant, either:
- Outright (most common)
- Into a qualifying trust for the descendant (immediate post-death interest, bare trust for a minor, certain other qualifying trust types)
- Via the spouse exemption first, then to descendants on the survivor's death
### 4. The death must be on or after 6 April 2017
Earlier deaths don't qualify; the RNRB doesn't apply retrospectively.
How the allowance is used
The RNRB is applied to the lower of:
- The value of the qualifying residential interest passing to descendants
- The maximum RNRB available (£175,000 in 2026, plus any transferred unused band from a deceased spouse)
So if you own a half-share in a £200,000 home and it passes to your children, you can use £100,000 of your RNRB. The remaining £75,000 (between the £100,000 used and the £175,000 maximum) is wasted unless you have a larger property interest.
The downsizing protection
A common worry: "What if I sell my big house and move to a small flat — do I lose the RNRB?"
The downsizing addition (introduced in 2018) protects against this. If you sell your qualifying home or downsize after 8 July 2015, the lost RNRB can be carried forward and applied to other assets (typically the proceeds of sale) — provided those assets eventually pass to direct descendants.
The calculations are complex but the principle is fair: downsizing in retirement shouldn't reduce your family's eventual IHT relief.
Transferring unused RNRB between spouses
Like the standard nil-rate band, any unused RNRB can be transferred to a surviving spouse or civil partner. So if the first partner dies leaving everything to the survivor (no RNRB used), the survivor's estate can claim both RNRBs on the second death — up to £350,000 of combined RNRB plus £650,000 of standard NRB = £1,000,000.
The unused RNRB is calculated as a percentage of the threshold at the second death. So if the first spouse died in 2018 when the RNRB was £125,000, the survivor's claim is "100% of the unused RNRB" applied to the current £175,000 rate — i.e. £175,000 of additional band.
The tapering for large estates
The RNRB is withdrawn for large estates. For every £2 the estate exceeds £2 million, £1 of RNRB is lost.
| Estate value | RNRB available |
|---|---|
| Up to £2,000,000 | Full £175,000 |
| £2,100,000 | £125,000 (lost £50,000) |
| £2,200,000 | £75,000 (lost £100,000) |
| £2,300,000 | £25,000 (lost £150,000) |
| £2,350,000 or more | £0 (fully tapered) |
For a married couple, the £2 million threshold applies to each estate at each death. If the first death's estate is under £2 million, the full RNRB transfers; if the survivor's estate is then over £2 million, that estate loses RNRB on the taper.
For estates over £2.35 million (single) or with combined post-second-death assets over £2.7 million (couple), the RNRB is effectively gone.
Will planning to capture the RNRB
For most families with a home worth less than £2 million in combined estate value, the RNRB applies automatically — provided the will leaves the home to direct descendants. The standard pattern works:
- Will leaves everything to the surviving spouse (unlimited spouse exemption, no IHT)
- On second death, will leaves residue (including the home) to the children
- RNRB + transferred RNRB applies to the value passing to the children, capped at £350,000
For couples wanting flexibility (e.g. blended families using a life interest trust over the home), the RNRB rules still apply provided the trust is one of the qualifying types — but the drafting needs to be careful. Take advice.
For estates approaching £2 million, the planning becomes more complex. Reducing the estate below £2 million (e.g. via lifetime gifts within the 7-year rule) can preserve the full RNRB. The arithmetic depends on the specific situation.
Trusted Hands wills are designed to capture the RNRB where it applies. The guided builder asks about your home, your spouse and your direct descendants, and structures the will to use the available allowances. Start your will →
Worked example
Mr and Mrs Smith own their £450,000 home jointly. Mrs Smith dies in 2026, leaving everything to Mr Smith. Mr Smith dies later in 2026 with a £600,000 estate (the home plus £150,000 in savings), leaving everything to their two adult children equally.
- Mrs Smith's death: Everything passes to her spouse — unlimited spouse exemption, no IHT, full NRB and RNRB unused and transferred to Mr Smith.
- Mr Smith's death:
- Standard nil-rate band: £325,000 + transferred £325,000 = £650,000
- Residence nil-rate band: £175,000 + transferred £175,000 = £350,000
- Combined allowances: £1,000,000
- Estate value: £600,000
- Estate is below the threshold — no IHT due
Without the RNRB transfer, the standard nil-rate bands alone (£650,000) would still have covered the estate. The RNRB matters more for higher-value estates.
Frequently asked questions
Can I claim the RNRB if I don't own a home?
No. The RNRB is specifically tied to a qualifying residential interest. Without a home you've lived in, the standard nil-rate band is your only allowance.
Can the RNRB cover a holiday home?
Only if you lived in it as your main residence at some point. A holiday home you never lived in doesn't qualify.
What if I sold my home and now rent?
The downsizing addition may help. If you sold a qualifying home after 8 July 2015, your eventual estate can claim RNRB on other assets up to the value of the home you sold, provided those assets pass to direct descendants.
Can stepchildren claim the RNRB?
Yes. Stepchildren are treated as direct descendants for RNRB purposes, even without formal adoption.
What about a foster child?
Yes, where the foster relationship is established (formal or informal long-term placement).
Can grandchildren receive the home and trigger the RNRB?
Yes. Direct descendants include grandchildren and further generations down.
Does the home have to pass outright, or can it go into a trust?
It can go into a qualifying trust for a direct descendant — for example, an immediate post-death interest trust (life interest), or a bare trust for a minor descendant. Discretionary trusts generally don't qualify; the descendant must have a recognisable interest in the property.
What if my partner and I aren't married?
The transfer of unused allowances only applies to spouses and civil partners. Cohabiting couples don't get the transfer — each must use their own RNRB at their own death. See our cohabiting couples guide.
Will the RNRB be frozen forever?
The current freeze runs to April 2028. After that, indexation is at the government's discretion. The cap of £175,000 in 2026 may rise in future Budgets, or may be replaced entirely by a new system. Plan based on what the law is now, not what it might become.
Is the RNRB the same as the "main residence relief"?
No. The RNRB is an inheritance tax allowance. "Main residence relief" (or Private Residence Relief) is a capital gains tax exemption that applies during your lifetime to the gain on selling your main home. Different taxes, different rules.
Trusted Hands is a UK will-writing service, not a tax adviser. For estates near or above the RNRB taper threshold (£2 million), or with complex structures involving trusts, take advice from a regulated tax adviser or solicitor specialising in IHT planning.
Make sure your will captures the RNRB
Trusted Hands wills are designed to use the RNRB where it applies — leaving the family home to direct descendants in a way HMRC recognises.
- From £49 for a single will
- Smart Will Engine asks the right questions about your home and descendants
- Free Executor Pack with IHT guidance
- Annual Subscription with Family Vault for keeping the will current as allowances change