The residence nil-rate band (RNRB) is an extra Inheritance Tax allowance of up to £175,000 that applies only when a residence passes to direct descendants — children, grandchildren, step-children, adopted or foster children, and their spouses.
Worked example — £900,000 estate, home to children
| Scenario | Tax-free bands | IHT due |
|---|---|---|
| Without the residence band | £325,000 | £230,000 |
| With the residence band | £500,000 | £160,000 |
| RNRB saving | £70,000 |
| Step | Amount |
|---|---|
| Net estate | £900,000 |
| Less nil-rate band | −£325,000 |
| Less residence nil-rate band | −£175,000 |
| Taxable estate | £400,000 |
| Rate | 40.0% |
| Inheritance Tax due | £160,000 |
How the £2m taper works
The RNRB falls by £1 for every £2 the net estate exceeds £2,000,000. A single £175,000 band is therefore fully tapered away once the estate reaches £2,350,000 (£2,000,000 + 2 × £175,000). The standard £325,000 nil-rate band is not tapered.
Who counts as a direct descendant
Children, grandchildren and other lineal descendants, plus step-children, adopted children, foster children and children you were appointed guardian or special guardian for. Nephews, nieces and siblings do not qualify — leaving your home to them means no residence band.
The current UK Inheritance Tax rules
| Allowance / rate | Amount | Notes |
|---|---|---|
| Nil-rate band (NRB) | £325,000 | 0% on this slice of every estate |
| Residence nil-rate band (RNRB) | £175,000 | Only when a home passes to direct descendants |
| Taper threshold | £2,000,000 | RNRB falls £1 for every £2 of estate above this |
| Standard rate | 40.0% | On the estate above the available bands |
| Reduced charity rate | 36.0% | If ≥10% of the net estate goes to charity |
Sources & as-of
- Nil-rate band, residence nil-rate band, 40% / 36% rates, £2m taper: GOV.UK — Inheritance Tax.
- Bands frozen at these levels until 5 April 2030 (end of tax year 2029-30): GOV.UK — IHT nil-rate bands from 6 April 2028.
- Residence nil-rate band conditions & taper: GOV.UK — Residence nil-rate band.
- Gifts & 7-year taper relief: GOV.UK — Inheritance Tax: gifts.
- Data as-of 2026-06-18. This is a planning estimate, not tax advice — confirm your figures with HMRC or a qualified solicitor / financial adviser. Inheritance Tax applies UK-wide (there are no devolved IHT rates).