The residence nil-rate band (RNRB) is an extra Inheritance Tax allowance of up to £175,000 for the 2026/27 tax year, available when you leave your home, or a share of it, to your children or other direct descendants. It sits on top of the main nil-rate band of £325,000, so a couple who plan carefully can pass on up to £1 million between them before Inheritance Tax applies. It tapers away for larger estates and comes with conditions worth understanding before you assume it applies to you.
How much is the residence nil-rate band?
For 2026/27, the maximum residence nil-rate band is £175,000 per person, frozen until 5 April 2031. It applies alongside the main nil-rate band of £325,000, which is frozen to 5 April 2031. Both figures are confirmed on gov.uk's Inheritance Tax thresholds and interest rates page.
| Allowance | 2026/27 figure | Frozen until |
|---|---|---|
| Nil-rate band (NRB) | £325,000 per person | 5 April 2031 |
| Residence nil-rate band (RNRB) | £175,000 per person | 5 April 2031 |
| Combined, single person | £500,000 | |
| Combined, married couple or civil partners (both allowances transferable) | £1,000,000 |
Like the main nil-rate band, any unused RNRB can transfer to a surviving spouse or civil partner, which is how a couple can reach the £1 million figure between them, provided the home is ultimately left to direct descendants.
Who counts as a direct descendant?
The RNRB only applies if the home passes to a direct descendant: a child, grandchild or other lineal descendant, or their spouse or civil partner (including a widow, widower or surviving civil partner). It also includes step-children, adopted children, fostered children, and children for whom you were appointed guardian. Full detail is set out in HMRC's guidance on the residence nil-rate band.
Nephews, nieces, siblings and friends do not count as direct descendants, however close the relationship, and leaving your home to them will not attract the RNRB. If your estate goes to a mixture of direct descendants and others, only the share left to a direct descendant counts.
How does the RNRB taper for larger estates?
The RNRB tapers away for estates worth more than £2 million, reducing by £1 for every £2 the estate exceeds that threshold. For a single person's full £175,000 allowance, this means the RNRB is fully gone once the estate reaches roughly £2.35 million. The taper is based on the value of the whole estate before reliefs like spouse exemption or business and agricultural relief, not just the value of the home.
This matters for anyone whose estate is close to £2 million once property, investments and other assets are added up, even if the home itself is worth far less than the maximum allowance.
What if the home is worth less than the allowance?
The RNRB you can claim is capped at the value of the home (or the share of it) left to direct descendants, even if your maximum available allowance is higher. If your home is worth £120,000 and your direct descendants inherit all of it, your RNRB is £120,000, not £175,000, and the unused £55,000 cannot be set against other assets in your own estate. It can, however, be transferred to a surviving spouse or civil partner's estate for use when they die.
What about downsizing?
If you sell or downsize your home, or stop owning one altogether, before you die, you do not automatically lose the RNRB. HMRC's downsizing provisions allow your estate to claim an amount broadly equivalent to the RNRB you would have had, provided assets of equivalent value pass to direct descendants and the other normal conditions are met. This is designed so that moving into a smaller property, or into care, later in life does not penalise an estate that would otherwise have qualified. The rules for calculating the downsizing addition are detailed and depend on the date of the sale and the value of what replaces the home, so this is an area worth checking carefully rather than assuming works in your favour by default.
Worked example
Example. Margaret dies in 2026/27, a widow, leaving an estate worth £900,000 to her two children. This includes her home, worth £400,000, and other assets worth £500,000. Her late husband used none of his nil-rate band or residence nil-rate band when he died some years earlier, so both are available to transfer in full to Margaret's estate.
Margaret's own residence nil-rate band: the lower of her home's value (£400,000) and the maximum RNRB (£175,000) = £175,000.
Transferred RNRB from her late husband: £175,000.
Total RNRB: £350,000.
Margaret's own nil-rate band: £325,000.
Transferred nil-rate band from her late husband: £325,000.
Total nil-rate band: £650,000.
Combined tax-free threshold: £350,000 + £650,000 = £1,000,000.
Margaret's estate is worth £900,000, so it falls entirely within the combined threshold. No Inheritance Tax is due, purely because both nil-rate bands and both residence nil-rate bands were available and the home passed to her children.
What this means in practice
Check who your home is left to under your current will. If it passes to a spouse or civil partner rather than directly to children, or into certain types of trust, the RNRB may not apply on the first death, though it may still be available on the second.
If your combined estate is approaching £2 million, work out where you sit relative to the taper threshold, since this affects planning far more than most people expect. If you have downsized or are planning to, check whether the downsizing provisions would preserve your RNRB before assuming a smaller home means a smaller allowance.
These calculations interact with the main nil-rate band, transferable allowances from a late spouse, and reliefs like Business Property Relief, so estates with more than a home and savings usually benefit from a proper review rather than a rule-of-thumb estimate. Our inheritance tax planning page covers the broader picture, and our wills page explains how we prepare wills, including mirror wills, with inheritance tax and your wider estate position in mind, so the will works as part of your tax planning.
A note on wills
Vision Consulting advises on the tax and estate planning side of passing on your home, including how your will interacts with the residence nil-rate band. We also prepare wills, including mirror wills, with inheritance tax and your wider estate position in mind, so the will works as part of your tax planning.
Frequently Asked Questions
No. It only applies if your home, or a share of it, passes to a direct descendant, such as a child or grandchild, and your estate is valued and reported correctly to claim it using the relevant Inheritance Tax forms.
It depends on the type of trust. Some trust structures mean the RNRB is not available because the direct descendants do not inherit the home outright when you die; this is an area where the specific trust terms matter and are worth checking individually.
Downsizing does not automatically lose you the RNRB. HMRC's downsizing provisions can preserve an amount equivalent to the allowance you would have had, provided other assets of similar value pass to direct descendants and the conditions are met.
The RNRB itself can apply to any direct descendant inheriting the home, regardless of the deceased's marital status. However, the ability to transfer unused RNRB between partners on the first death only applies to married couples and civil partners, not unmarried couples.
Your residence nil-rate band starts tapering away once your estate exceeds £2 million, reducing by £1 for every £2 over that threshold, and disappears entirely for a single person's estate at around £2.35 million. Estates near this threshold benefit from a specific review of what counts towards the taper.
Talk to us about your estate
If you want to understand how the residence nil-rate band applies to your own estate, or whether your current will makes the most of it, speak to Chloe Symmonds, Senior Manager, who leads our inheritance tax planning work. The first conversation is about understanding your estate and your family's situation, not a sales pitch. Call 020 8554 2135 or email info@visionconsulting.co.uk, or get in touch via our contact page.
By the Vision Consulting team.
This is general information, not advice. Your position depends on your circumstances.