How the RNRB works in 2025/26
The Residence Nil Rate Band was introduced in April 2017 (£100k) and reached £175,000 in April 2020. It's been frozen at £175,000 since then and remains so through April 2028 under the current freeze.
Eligibility:
- The deceased owned a residence at some point in their life (it doesn't need to be their main home at death).
- The residence (or its replacement value if downsized after 8 July 2015) is left to "direct descendants" — children, grandchildren, great-grandchildren, including step, adopted, foster, and the spouses/civil partners of those descendants.
- The estate value (before reliefs) is below £2 million, or only partially above the taper threshold.
Taper above £2m: For each £2 of estate value over £2 million, £1 of RNRB is lost. The taper completely eliminates the RNRB at estate values of £2.35m (single) or £2.7m (couple, transferable RNRB included).
Transferability: Like the standard NRB, unused RNRB transfers to a surviving spouse on first death. So a couple where neither spouse used any RNRB (all assets passed to the surviving spouse) can have their full £350,000 RNRB available on the second death, plus their £650,000 NRB — total £1m.
Strategies to use the RNRB efficiently
Common scenarios and planning techniques:
- Gift the home in a lifetime trust: Doesn't qualify for RNRB if outside the deceased's estate at death. Generally not recommended for RNRB purposes.
- Downsize and use Downsizing Provisions: Sold home before death? Can still claim RNRB based on the unused value if proceeds passed to descendants.
- Will leaves home to children directly: Standard case — full £175k RNRB applies.
- Will leaves home to spouse, who later leaves to children: RNRB transfers; second death uses £350k.
- Estate exceeds £2m: Consider lifetime gifts or business relief assets to bring estate under £2m before death.
- Single never-married, no children: RNRB is unavailable — can't pass to direct descendants.
Common pitfall — Discretionary Will Trust: A residence left into a discretionary trust (with descendants as beneficiaries) generally doesn't qualify for RNRB. Use immediate-vesting trusts or absolute gifts to descendants.
Three worked examples (UK 2025/26)
Example 1: £600,000 estate, single, home £350k to children
Mary's estate £600,000 with home £350,000 to her two children. Single, no spouse.
Calculation: NRB £325k + RNRB £175k = £500k allowance. Taxable £100k × 40% = £40,000 IHT. Without RNRB, IHT would have been £110k. Saving £70k.
Example 2: £1,200,000 estate, married, second death
Couple where surviving spouse dies in 2025/26 with £1.2m estate including £600k home passing to 3 children.
Calculation: Both partners' allowances: NRB £650k + RNRB £350k = £1m total. Taxable £200k × 40% = £80,000 IHT.
Example 3: £2.5m estate — RNRB tapered to zero
Robert (single) has £2.5m estate including £800k home to son.
Calculation: Taper: estate £500k over £2m → RNRB reduced by £250k → fully tapered (RNRB max £175k). RNRB = £0. NRB only £325k. Taxable £2,175,000 × 40% = £870,000 IHT. Saving the £70k of RNRB completely lost.
Common mistakes to avoid
- Leaving the home to a discretionary trust — disqualifies RNRB even if descendants are beneficiaries.
- Ignoring the £2m taper threshold — large estates lose RNRB entirely above £2.35m (single).
- Forgetting downsizing provisions — selling the home before death doesn't necessarily forfeit RNRB.
- Believing siblings or nieces/nephews count as descendants — only direct lineage qualifies.
- Not transferring unused RNRB on first death — must claim within 2 years on second death's IHT400.
- Treating RNRB as available against any estate — it's specifically tied to the residence value passing to descendants.
When to use this calculator
Use this calculator when planning your will, after major property purchases or sales, when receiving large inheritances (which can push estates above £2m), and as part of any IHT mitigation strategy. Re-run after Budget announcements — RNRB freeze is currently set to April 2028 but could change. Couples should review every 5-10 years to ensure transferable RNRB documentation is in order.
Regional differences (Scotland, Wales, Northern Ireland)
UK Inheritance Tax is UK-wide with identical £325,000 nil-rate band, £175,000 residence nil-rate band, 40% rate (36% if 10%+ to charity), and 7-year gift rules across England, Wales, Scotland, and Northern Ireland. Devolution does not affect IHT. The exception is some Scottish-specific terminology (e.g. "executor-dative" instead of "personal representative"), but the substantive tax rules are uniform. Crown Dependencies (Isle of Man, Jersey, Guernsey) have their own (much lower or zero) IHT regimes.