Tax & estate planning guide
Residence nil-rate band explained
The residence nil-rate band — RNRB — can provide an additional Inheritance Tax allowance when a qualifying home passes to direct descendants. For 2026/27, the maximum RNRB is £175,000.
The allowance
The maximum residence nil-rate band is £175,000 in 2026/27.
The RNRB sits alongside the standard nil-rate band. Where all conditions are met, one individual can therefore potentially have up to £500,000 of combined nil-rate bands: £325,000 standard nil-rate band plus £175,000 RNRB.
The RNRB is currently fixed at £175,000, with the taper threshold fixed at £2 million.
If the qualifying home interest is worth less than the available RNRB, the usable allowance can be lower.
Qualifying residence
The estate needs a qualifying home interest.
The RNRB can apply where the deceased owned a residence that qualifies under the rules and it passes to direct descendants.
The property does not necessarily have to remain in the family after death. HMRC confirms that the personal representatives can sell the home during estate administration and the RNRB can still be available where the sale proceeds pass to direct descendants under the estate arrangements.
The detailed residence rules matter, particularly where there are multiple properties or unusual ownership arrangements.
Who counts?
RNRB is aimed at homes passing to direct descendants.
HMRC's definition includes children, grandchildren and other lineal descendants. It can also include adopted children, stepchildren, certain foster children, certain children for whom the deceased was a guardian, and spouses or civil partners of lineal descendants.
Included
Children, grandchildren, great-grandchildren and other qualifying lineal descendants.
Can also qualify
Adopted children, stepchildren and certain fostered or guarded children, subject to the rules.
Spouses of descendants
A spouse or civil partner of a qualifying lineal descendant can also fall within the definition.
Not direct descendants
Nephews, nieces, siblings and other relatives outside HMRC's definition do not qualify merely because they are family.
Large estates
The RNRB starts to taper away once the estate exceeds £2 million.
For estates above the £2 million taper threshold, the RNRB is reduced by £1 for every £2 that the net estate exceeds £2 million.
This is why the headline £175,000 allowance should not be assumed without looking at total estate value.
Married couples & civil partners
Unused RNRB can usually be transferred to a surviving spouse or civil partner.
Where the first spouse or civil partner to die does not use all of their RNRB, the unused percentage can generally be transferred to the survivor's estate.
This can potentially provide up to £350,000 of combined RNRB on the second death, in addition to up to £650,000 of combined standard nil-rate bands, where all transfer and RNRB conditions are met.
The home must pass in a qualifying way, transferred allowances must be available and the large-estate taper can reduce the RNRB.
Downsizing or selling
You may still qualify even if you no longer own the original home at death.
HMRC has a downsizing addition designed for certain people who downsized, sold or gave away a qualifying home on or after 8 July 2015.
Broadly, the former home must have been capable of qualifying for RNRB, and direct descendants must inherit enough of the remaining estate for the downsizing rules to apply.
Where a home has been sold, gifted or replaced with a lower-value property, specialist tax or legal advice may be appropriate.
Estate planning
Will your estate qualify for the residence nil-rate band?
We can help you understand how the value of your estate, your home and your intended beneficiaries fit together, while identifying where specialist legal or tax advice is needed.
Book a conversationThis guide is for general information only and is not personal tax, legal or financial advice. Residence nil-rate band rules are detailed and depend on estate value, property ownership, beneficiaries and other circumstances. Tax rules can change. Current HMRC/GOV.UK guidance checked on 16 September 2026.