Residence nil-rate band: passing your home to children

By CareFinder Team · Published 2026-06-30 · Last reviewed 2026-09-18

The residence nil-rate band is an extra Inheritance Tax allowance of up to £175,000 per person when a home passes to children, grandchildren or other direct descendants. Added to the £325,000 standard band, a married couple or civil partners can pass on up to £1 million tax-free. Both are fixed until April 2031, and the allowance tapers away for estates worth over £2 million.

The residence nil-rate band is an extra Inheritance Tax allowance of up to £175,000 per person that applies when a home, or a share of one, passes to children, grandchildren or other direct descendants on death. It sits on top of the standard £325,000 nil-rate band, and both are fixed at these levels until April 2031. A married couple or civil partners can pass on up to £1 million between them without Inheritance Tax if the conditions are met.

This guide explains how the allowance works, who counts as a direct descendant, what happens if the home is sold to pay for care, and the common traps. Inheritance Tax rules are the same across the UK, but this is general information, not tax or legal advice.

What is the residence nil-rate band?

Every estate has a standard Inheritance Tax threshold, the nil-rate band, of £325,000. Inheritance Tax is normally charged at 40% on the part of an estate above the available allowances.

The residence nil-rate band (RNRB), also called the residence allowance, was introduced in April 2017. According to HMRC's guidance on the residence nil rate band, it can be used when someone dies and their home, or a share of it, is inherited by their direct descendants.

The thresholds were fixed in the November 2025 Budget for a further year, so the nil-rate band, the residence nil-rate band and the taper threshold stay at their current levels until the end of the 2030 to 2031 tax year. Check GOV.UK for the current position.

Who counts as a direct descendant?

Direct descendants include:

• children, grandchildren and further lineal descendants;
• stepchildren, adopted children and foster children;
• the spouses or civil partners of any of these, including widows and widowers of a descendant.

Leaving the home to nieces, nephews, siblings, friends or a charity does not qualify for the RNRB, although the standard nil-rate band still applies.

What property qualifies?

• The property must have been the person's home at some point while they owned it. It does not need to be where they lived when they died.
• Only one residence can qualify. If there is more than one, the executors can choose which.
• The allowance is limited to the value of the home (after any mortgage) passing to direct descendants, up to the maximum.
• Property left in some trusts can qualify only if a direct descendant becomes entitled to it on the death. Many discretionary trusts do not qualify, so wills using trusts should be reviewed by a solicitor.

How does it work for married couples and civil partners?

Anything left to a spouse or civil partner is usually free of Inheritance Tax, and any unused nil-rate band and residence nil-rate band can be transferred to the survivor's estate.

This means that on the second death, the estate may be able to claim:

• two standard nil-rate bands; and
• two residence nil-rate bands;

a total of £1 million, if the home passes to direct descendants and the estate is below the taper threshold.

HMRC's policy paper on the main residence nil-rate band confirms the unused allowance can be transferred where the second death is on or after 6 April 2017, whenever the first spouse died. The executors must claim the transfer.

What is the taper for larger estates?

For larger estates, the RNRB is reduced by £1 for every £2 that the net value of the estate is above £2 million. The net value is taken after debts but before reliefs and exemptions. So:

• a single person's own allowance is lost completely once the estate is worth £350,000 more than the threshold;
• where a transferred allowance is also available, it disappears at a higher level.

Lifetime gifts may reduce the estate below the taper threshold, but gifts have their own Inheritance Tax rules and must be planned carefully.

What if the home is sold to pay for care?

This is a common worry for families. The downsizing rules protect the allowance if someone:

• sold, gave away or downsized to a less valuable home on or after 8 July 2015; and
• leaves other assets of equivalent value to their direct descendants.

So if your parent sells their home to pay care home fees and later dies, their estate may still be able to claim some or all of the RNRB, provided enough of the estate passes to their children or grandchildren. The executors need records of the property sale, so keep them.

Remember that Inheritance Tax and care funding are separate. The residence nil-rate band has no effect on whether the home counts in a council's care means test.

What changes are coming for pensions?

From 6 April 2027, most unused pension funds and pension death benefits will be included in the value of an estate for Inheritance Tax. For some families this will push the estate over the taper threshold, reducing or removing the RNRB. If your parent has significant pension savings, it is worth reviewing their plans.

How do you use the allowance?

1. Make a will that leaves the home, or enough of the estate, to direct descendants. Without a will, the intestacy rules decide who inherits, which may or may not qualify.
2. Review older wills, especially those using trusts, to check they still qualify.
3. Keep records of any home sold or downsized since 8 July 2015.
4. Tell your executors that a transferable allowance may be available from a late spouse or civil partner.
5. Get professional advice if the estate is near or above the taper threshold, includes a business or farm, or involves trusts.

The executors claim the RNRB when they deal with the estate and report it to HMRC. The general rules are on GOV.UK's Inheritance Tax pages.

Frequently asked questions

Can I claim the residence nil-rate band if I don't have children?

Only if you leave the home to other direct descendants such as grandchildren or stepchildren. Leaving it to nieces, nephews or friends does not qualify, but the standard nil-rate band still applies.

Does the home have to be worth the full allowance?

No. The allowance is the lower of the maximum and the value of the home interest passing to direct descendants. A home worth less gives a smaller allowance.

Can the allowance be used if my mother sold her house to move into a care home?

Often yes, under the downsizing rules, if she sold on or after 8 July 2015 and leaves assets of equivalent value to her direct descendants. Her executors will need the sale details.

Is the allowance automatic?

No. The executors must claim it, including any transferred allowance from a late spouse or civil partner.

Does it apply in Scotland and Northern Ireland?

Yes. Inheritance Tax is a UK-wide tax, so the same rules apply, although wills and succession law differ between the nations.

Key takeaways

• The RNRB adds up to £175,000 per person when a home passes to direct descendants.
• Together with the standard band, a couple may pass on up to £1 million free of Inheritance Tax.
• The allowance tapers away for larger estates, and thresholds are fixed until April 2031.
• Downsizing rules can protect the allowance if a home is sold, including to pay for care.
• Unused pensions will count towards estates from April 2027, so review plans and wills.