The Residence Nil Rate Band is an additional Inheritance Tax allowance available where a qualifying residential property is included in the estate and passes to a direct descendant. It can significantly reduce or eliminate an IHT liability on qualifying estates.
How much is it?
For the 2024 to 2025 tax year, the RNRB is £175,000 per person. Combined with the standard nil rate band of £325,000, a qualifying individual could have a total IHT-free threshold of £500,000. Where a married couple both qualify, the combined threshold can reach £1 million.
Who qualifies?
The RNRB applies where the estate includes a qualifying residential property that the deceased has lived in at some point during their ownership, and that property passes to a direct descendant. Direct descendants include children (including adopted, fostered, and step-children), grandchildren, and further lineal descendants.
What if the estate is large?
The RNRB tapers away for estates with a net value above £2 million. For every £2 above this threshold, £1 of RNRB is withdrawn. Getting this calculation right requires an accurate net estate figure.
YouCanDoProbate determines whether the RNRB applies and calculates the correct amount automatically. The relevant sections of the IHT400 are completed accordingly.
