Residence Nil-Rate Band Explained: The 2026/27 Guide
How the GBP 175,000 residence nil-rate band works in 2026/27, who qualifies, the taper above GBP 2m, and how couples can pass on GBP 1m IHT-free.
Quick answer
The residence nil-rate band is an extra GBP 175,000 of inheritance tax allowance for 2026/27 that applies when you leave your main home to direct descendants. Added to the standard GBP 325,000 nil-rate band, one person can pass on up to GBP 500,000 tax-free, and a couple up to GBP 1 million. It tapers away above a GBP 2 million estate.
What the residence nil-rate band is
Inheritance tax (IHT) starts from a simple idea: everyone has a nil-rate band of GBP 325,000 that passes free of tax. Above that, the standard rate is 40% (or 36% if at least 10% of the net estate goes to charity). The residence nil-rate band, introduced from April 2017, is a second, conditional allowance worth GBP 175,000 in 2026/27. It is designed specifically to take the family home out of the IHT net when it is left to the next generation.
The two bands stack. For a single person whose home passes to their children, the total allowance is GBP 325,000 plus GBP 175,000, which equals GBP 500,000. The 40% rate then applies only to value above that figure. To see how the bands and the 40% rate interact for a specific estate, run the numbers with the
Inheritance Tax Calculator
Estimate Inheritance Tax liability on an estate with our UK IHT calculator.
Open Inheritance Tax calculatorHow the allowances stack for 2026/27
The headline figures for the current tax year are unchanged, because both bands are frozen.
| Allowance | 2026/27 value | Applies to |
|---|---|---|
| Nil-rate band (NRB) | GBP 325,000 | Any assets in the estate |
| Residence nil-rate band (RNRB) | GBP 175,000 | Home left to direct descendants |
| Combined, single person | GBP 500,000 | Estate including a qualifying home |
| Combined, couple (transferred) | GBP 1,000,000 | Two of each band |
| IHT rate above allowances | 40% | 36% if 10%+ left to charity |
Freezing the bands while house prices and asset values drift upward means more estates gradually become taxable. This is the fiscal-drag effect, and it is the main reason estate planning has become relevant to families who would never have considered themselves wealthy.
Who qualifies as a direct descendant
The RNRB is tightly drawn around lineal descendants. You can use it if the home passes to:
- Children, grandchildren, great-grandchildren and their own descendants.
- Stepchildren, adopted children and foster children.
- A child you were appointed as guardian or special guardian for while they were under 18.
- The spouse or civil partner of any of the above, including a widow or widower who has not remarried.
It does not cover nieces, nephews, brothers, sisters, parents or unrelated friends. If you leave the home to anyone outside the direct-descendant definition, the RNRB simply cannot be claimed on that gift, even though the standard GBP 325,000 nil-rate band still applies to the estate as a whole.
The qualifying residential interest
The property must have been your residence at some point. A buy-to-let that you never lived in does not count. If you owned more than one home that you actually lived in, your personal representatives can nominate one of them as the qualifying residential interest. Only one property can be nominated, and it must pass to direct descendants for the band to bite.
You do not have to leave the whole house. If you leave a share, the RNRB is limited to the value of that share, capped at GBP 175,000. Equally, if the home is worth less than GBP 175,000, the RNRB is capped at the home's value -- you cannot claim more than the residential interest is worth.
How couples reach GBP 1 million
The combined GBP 1 million figure that often appears in headlines depends on the transfer of unused allowances between spouses and civil partners. Here is the mechanism.
When the first partner dies and leaves everything to the survivor, transfers between spouses and civil partners are exempt from IHT, so no tax is due and the deceased's allowances go unused. Those unused allowances -- both the nil-rate band and the residence nil-rate band -- can then be transferred to the survivor. On the second death, the survivor's estate can claim:
- Two nil-rate bands: GBP 325,000 plus GBP 325,000 = GBP 650,000.
- Two residence nil-rate bands: GBP 175,000 plus GBP 175,000 = GBP 350,000.
- A combined total of GBP 1,000,000.
A single person with a qualifying home reaches a GBP 500,000 tax-free threshold. A married couple or civil partners, using transferred allowances and leaving the home to children, can reach GBP 1,000,000. The difference -- a full GBP 500,000 of tax-free value, worth GBP 200,000 in IHT at 40% -- comes entirely from the ability to transfer two unused bands on the second death.
The transfer is claimed by the personal representatives of the second estate, normally within two years of the end of the month of the second death. It is worth noting that transferred bands are expressed as a percentage of the band available at the second death, not a fixed cash figure, which matters if the bands change in future.
The GBP 2 million taper
The RNRB is not available to the largest estates. It is reduced by GBP 1 for every GBP 2 by which the net estate exceeds GBP 2 million. Two points are easy to miss:
- The GBP 2 million test is measured before reliefs such as business relief or agricultural relief are taken off. An estate can owe little IHT after reliefs yet still lose the RNRB because its headline value is high.
- Because the taper removes the band at half the rate the estate grows, a single person's GBP 175,000 band is fully withdrawn once the estate reaches GBP 2.35 million (GBP 175,000 multiplied by 2, added to the GBP 2 million threshold).
| Net estate (before reliefs) | RNRB reduction | RNRB remaining (single) |
|---|---|---|
| GBP 2,000,000 or below | None | GBP 175,000 |
| GBP 2,100,000 | GBP 50,000 | GBP 125,000 |
| GBP 2,200,000 | GBP 100,000 | GBP 75,000 |
| GBP 2,350,000 | GBP 175,000 | GBP 0 |
For couples with two transferable bands, the taper is applied separately at each death, so the combined GBP 350,000 of residence allowance is withdrawn over a wider span of estate values. The arithmetic gets fiddly, which is exactly where a calculation tool earns its keep.
Downsizing and selling the home
A common worry is that selling the family home -- to fund care, to move into a flat, or simply to free up cash -- destroys the RNRB. It does not have to. A downsizing addition allows the estate to claim an amount of RNRB broadly equal to what would have been available, where the home was sold, swapped for a less valuable one, or given up entirely on or after 8 July 2015.
The condition is that you leave other assets of at least the relevant value to direct descendants. So if you downsized and left cash or investments to your children instead of the house, the relief can still flow through. The detailed calculation compares the RNRB that would have applied to the former home with what applies now, so keep records of the sale and the property's value at the time.
A worked example
Consider a widow whose husband died several years ago, leaving everything to her. Her estate in 2026/27 is GBP 900,000, including a home worth GBP 400,000 that she leaves to her two children, with the rest split between them as cash and investments.
- Her own NRB: GBP 325,000.
- Transferred NRB from her late husband: GBP 325,000.
- Her own RNRB: GBP 175,000.
- Transferred RNRB: GBP 175,000.
- Total allowances: GBP 1,000,000.
Her estate of GBP 900,000 sits comfortably below GBP 1,000,000, so no IHT is due. The home easily absorbs both residence bands because, at GBP 400,000, its value exceeds the GBP 350,000 of combined RNRB on offer. Had her estate been, say, GBP 1,200,000, the 40% rate would apply to the GBP 200,000 above the allowances, producing an IHT bill of GBP 80,000. Test your own figures with the
Inheritance Tax Calculator
Estimate Inheritance Tax liability on an estate with our UK IHT calculator.
Open Inheritance Tax calculatorPractical steps to protect the band
- Check your will leaves the home, or a share of it, to direct descendants -- not to a sibling, friend or a trust that breaks the qualifying conditions.
- If you are married or in a civil partnership, make sure each will preserves the ability to transfer unused bands; leaving everything to the survivor usually achieves this cleanly.
- Watch the GBP 2 million threshold. If your estate is near it, value gifted before death, pensions and reliefs all affect whether the RNRB survives.
- If you have downsized or sold up, keep the paperwork so your personal representatives can claim the downsizing addition.
- Review the plan every few years. Because the bands are frozen, rising values can quietly push an estate into tax.
The bottom line
The residence nil-rate band is a valuable but conditional allowance. Used well, it lifts a single person's tax-free threshold to GBP 500,000 and a couple's to GBP 1 million when the family home passes to children or grandchildren. Used carelessly -- by leaving the home to the wrong people, ignoring the GBP 2 million taper, or forgetting to claim a transferred band -- it can be lost entirely. The figures are fixed for 2026/27, so the planning, not the rates, is where the value lies.
Frequently asked questions
What is the residence nil-rate band for 2026/27?
The residence nil-rate band (RNRB) is an extra GBP 175,000 of inheritance tax allowance that applies when you leave your main home, or a share of it, to direct descendants such as children, stepchildren, adopted children or grandchildren. It sits on top of the standard GBP 325,000 nil-rate band. So an individual can potentially pass on up to GBP 500,000 free of inheritance tax in 2026/27, provided the home qualifies and the estate is not too large.
Can a married couple pass on GBP 1 million tax-free?
Yes, in the right circumstances. Each person has a GBP 325,000 nil-rate band and a GBP 175,000 residence nil-rate band. When the first spouse or civil partner dies and leaves everything to the survivor, both unused allowances transfer. The survivor's estate can then claim two nil-rate bands (GBP 650,000) plus two residence nil-rate bands (GBP 350,000), giving a combined GBP 1 million. The home must pass to direct descendants and the estate must be below the taper threshold.
Who counts as a direct descendant for the RNRB?
Direct descendants include children, grandchildren, great-grandchildren and their lineal descendants. It also covers stepchildren, adopted children, foster children and children you were appointed guardian or special guardian for while they were under 18. Spouses and civil partners of those descendants count too, including widows and widowers who have not remarried. Nieces, nephews, siblings and unrelated friends do not qualify, so leaving the home to them means the RNRB cannot be used.
Does the residence nil-rate band taper away for large estates?
Yes. The RNRB is reduced by GBP 1 for every GBP 2 that the net estate exceeds GBP 2 million. The GBP 2 million test uses the estate value before reliefs such as business or agricultural relief are deducted. Because the band tapers at this rate, a single person's GBP 175,000 RNRB is lost entirely once the estate reaches GBP 2.35 million. Couples who can claim two bands lose theirs over a wider range, so planning matters.
What if I have sold my home or downsized?
There is a downsizing addition designed for this. If you sold your home, moved to a less valuable one, or stopped owning a home on or after 8 July 2015, your estate may still claim an amount of RNRB equal to what would have been available, provided you leave assets of at least that value to direct descendants. The rules are detailed, so it is worth checking the calculation carefully or taking advice before relying on it.
Do I have to leave the whole house to my children?
No. You can leave a share of the home and still claim RNRB on that share, up to the GBP 175,000 cap. The relief is limited to the value of the residential interest that passes to direct descendants, capped at the available band. If the home is worth less than GBP 175,000, the RNRB is limited to the home's value. Any unused RNRB can transfer to a surviving spouse or civil partner for use on their death.
Does the RNRB apply to buy-to-let or holiday homes?
The residence nil-rate band only applies to a property that was the deceased's residence at some point. A pure buy-to-let that you never lived in does not qualify. If you owned more than one home that you lived in, your personal representatives can nominate which one is treated as the qualifying residential interest. Only one property can be nominated, and it must pass to direct descendants for the band to apply.
How is the residence nil-rate band claimed?
It is not automatic. The personal representatives of the estate must claim it on the inheritance tax forms, including any transferred RNRB from a predeceased spouse or civil partner. Claims for transferred allowances generally must be made within two years of the end of the month of death, although HMRC can accept late claims in limited cases. Keep records of the home's value, the will and the beneficiaries to support the claim.
What inheritance tax rate applies above the allowances?
Inheritance tax is charged at 40% on the value of the estate above the available nil-rate bands. A reduced rate of 36% applies if at least 10% of the net estate is left to charity. The nil-rate band of GBP 325,000 and the residence nil-rate band of GBP 175,000 are deducted first, along with any transferred bands, before the 40% rate bites on the remainder.
Is the residence nil-rate band frozen?
Both the standard nil-rate band of GBP 325,000 and the residence nil-rate band of GBP 175,000 have been frozen for several years and remain unchanged for 2026/27. Frozen allowances combined with rising property values mean more estates are drawn into inheritance tax over time, a process sometimes called fiscal drag. It is sensible to review your estate plan periodically rather than assuming the allowances will rise.
Try the calculators
Related reading
Business Property Relief 2026: How BPR Cuts Your IHT Bill
A plain-English guide to Business Property Relief (BPR) for 2026/27: what qualifies for 100% or 50% relief, the two-year rule, traps and how it slashes inheritance tax.
Discretionary Trust 10-Year Charge: A 2026 Guide
How the discretionary trust 10-year (periodic) IHT charge works in 2026/27, who pays it, how it is calculated step by step, and how to plan ahead.
Taper Relief and IHT Explained: The 7-Year Gift Rule 2026/27
How inheritance tax taper relief works on gifts in 2026/27, the 7-year rule, the GBP 325,000 nil-rate band and when the 40% IHT rate really applies.