Answers · UK 2025/26
How does the residence nil rate band work for inheritance tax?
The Residence Nil Rate Band (RNRB) gives an additional £175,000 IHT-free allowance when a main residence is passed to direct descendants (children, grandchildren) on death. Combined with the standard £325,000 Nil Rate Band, a single person can pass up to £500,000 free of inheritance tax.
Full answer
The Residence Nil Rate Band (RNRB) is an additional inheritance tax (IHT) allowance, introduced in 2017, specifically designed to help families pass the family home to the next generation without paying the 40% IHT rate. **2026/27 RNRB Figures** - RNRB per individual: **£175,000** - Standard Nil Rate Band (NRB): **£325,000** - Combined allowance (individual): **£500,000** - Combined allowance (married couple, transferring both allowances): **£1,000,000** **Conditions for RNRB** 1. **A qualifying residence must be included in the estate** -- the property must have been the deceased's main home at some point. A buy-to-let property that was never the deceased's residence does not qualify. 2. **The property must pass to direct descendants** -- children, stepchildren, adopted children, foster children, and their lineal descendants (grandchildren, great-grandchildren). Nieces, nephews, and siblings do not qualify. 3. **The estate must not exceed the taper threshold** -- the RNRB tapers away by £1 for every £2 above an estate value of £2,000,000, reaching zero at £2,350,000 for a single person. **Worked Example -- single person** - Estate: house worth £400,000 + other assets £150,000 = £550,000 total - Standard NRB: £325,000 - RNRB: £175,000 - Total allowance: £500,000 - Taxable estate: £550,000 - £500,000 = £50,000 - IHT at 40%: **£20,000** **Transferring RNRB between spouses** Like the standard NRB, any unused RNRB on the death of the first spouse can be transferred to the surviving spouse. If the first spouse died before the RNRB was introduced, the full £175,000 RNRB is still transferable to the survivor, giving a potential £350,000 RNRB on second death. **Downsizing addition** If the deceased sold or downsized from a larger property after 8 July 2015, they may still claim the RNRB based on the property they sold, provided direct descendants inherit other assets of equivalent value from the estate.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.