Last updated: 16 October 2026
What is the residence nil rate band?
The residence nil rate band (RNRB) is an extra inheritance tax allowance of up to £175,000 when a home that the person lived in at some point passes to their direct descendants on death. It sits on top of the standard nil rate band of £325,000. Both are frozen until 5 April 2031. A married couple or civil partners can pass on up to £1 million free of inheritance tax, because unused allowances transfer to the surviving spouse.
Who counts as a direct descendant?
Children, grandchildren and great-grandchildren, including stepchildren, adopted and foster children, and their spouses or civil partners. Leaving the home to nieces, nephews, siblings or friends does not qualify.
Does the home have to be your main home?
No. It must be a property you lived in at some time, not necessarily your main residence at death. If you have lived in more than one property, your executors can nominate which one the RNRB applies to.
The question
I own a London flat worth about £500,000. Five years ago I moved to Weymouth, where I run a bed and breakfast and live in a small part of it. I want to leave the flat to my daughter. Will the RNRB apply, and do I have to claim it?
The answer
Yes, the flat can qualify because you lived in it in the past, and you are leaving it to your daughter. Your executors could alternatively nominate the part of the B&B you live in, but only the residential part would count. Choosing the flat makes sense if its value is higher. The RNRB is not automatic: your executors must claim it when they report the estate to HMRC, using the inheritance tax forms.
Key rules
| Rule | Detail |
| Maximum RNRB | £175,000 per person |
| Taper | Reduced by £1 for every £2 the estate is worth above £2 million |
| Transfer | Unused RNRB passes to the surviving spouse or civil partner |
| Downsizing | Can still apply if you sold or downsized after 8 July 2015 and leave other assets to descendants |
| Value limit | RNRB is limited to the value of the home passed on |
Example
Joan dies leaving an estate of £900,000, including her home worth £400,000, all to her son. Her allowances are £325,000 plus £175,000, so £500,000. Inheritance tax is 40% of £400,000, which is £160,000. Without the RNRB, it would have been £230,000.
Watch out for trusts
Leaving the home into certain discretionary trusts can mean the RNRB is lost. Wills drafted before 2017 may need reviewing to make sure the RNRB is available.
Frequently asked questions
Does a buy-to-let I never lived in qualify?
No. You must have lived in the property at some point.
Can the RNRB be used on lifetime gifts?
No, it only applies on death.
What if the estate is worth over £2.35 million?
The RNRB is lost completely for a single person at that level.
Is there a time limit to claim a transferred RNRB?
Two years from the end of the month of the second death, though HMRC may accept late claims.
Related: transferring your home to children, gifting your home to reduce IHT and IHT on a vacated property.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with inheritance tax and wills. See our inheritance tax planning service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
