Glossary · UK
What is Residence Nil-Rate Band Taper?
The reduction of the £175,000 residence nil-rate band by £1 for every £2 an estate exceeds £2 million, removing it entirely above £2.35 million.
Full Definition
The residence nil-rate band (RNRB) is an extra inheritance tax allowance of £175,000 in 2026/27, available when a home (or its value) is left to direct descendants such as children, stepchildren, adopted children or grandchildren. It sits on top of the standard nil-rate band of £325,000, so a single person passing on their home to descendants can shelter up to £500,000 before 40% IHT applies. However, the RNRB is tapered for larger estates: it falls by £1 for every £2 by which the net estate exceeds the £2 million threshold. This means the £175,000 allowance is fully withdrawn once an estate reaches £2.35 million (£2,000,000 plus twice £175,000). The taper is based on the estate value before reliefs such as business or agricultural relief, which can push otherwise modest estates over the limit. Both the £325,000 nil-rate band and the £175,000 RNRB (including the taper threshold) are frozen until 2030. Unused RNRB can transfer to a surviving spouse or civil partner, so a couple may combine up to £350,000 of RNRB, though each portion is tapered independently against the £2 million threshold. IHT rules are UK-wide; Scotland, Wales and Northern Ireland follow the same thresholds.