Inheritance Tax calculator: 2026/27
UK RNRB Calculator 2026/27: £175,000 Allowance + £2m Taper
The Residence Nil Rate Band (RNRB) - £175,000 extra UK Inheritance Tax allowance per individual when a qualifying main residence passes to direct descendants. Combined with the £325,000 Nil Rate Band, a married couple can pass £1,000,000 IHT-free on the second death. The £2,000,000 estate taper, transferable RNRB between spouses, downsizing addition, will-trust interactions, and worked examples across 6 estate-value scenarios.
Headline rates 2026/27
| Item | Amount | Notes |
|---|---|---|
| Nil Rate Band (NRB) | £325,000 | Standard IHT-free allowance per individual. Frozen since 2009. |
| Residence Nil Rate Band (RNRB) | £175,000 | Extra allowance when home passes to direct descendants. Frozen through April 2030. |
| Single owner maximum (with home + descendants) | £500,000 | NRB + RNRB combined. |
| Couple maximum (both transferable, second death) | £1,000,000 | 2× NRB + 2× RNRB. The headline £1m couple IHT-free figure. |
| Estate taper threshold | £2,000,000 | RNRB tapered £1 for every £2 estate value above this. Eliminated entirely above £2.35m. |
| IHT rate above allowances | 40% | Standard rate. 36% reduced rate if 10%+ of net estate goes to charity. |
The £2 million estate taper
RNRB is tapered (reduced) where the deceased's net estate exceeds £2,000,000. The reduction is £1 of RNRB for every £2 of estate value over the threshold. The taper applies to each individual's RNRB separately. The progression:
| Net estate value | Excess over £2m | RNRB reduction | RNRB available |
|---|---|---|---|
| £1,500,000 | £0 | £0 | £175,000 |
| £2,000,000 | £0 | £0 | £175,000 |
| £2,100,000 | £100,000 | £50,000 | £125,000 |
| £2,200,000 | £200,000 | £100,000 | £75,000 |
| £2,300,000 | £300,000 | £150,000 | £25,000 |
| £2,350,000 | £350,000 | £175,000 | £0 |
| £2,500,000 | £500,000 | £250,000 | £0 |
The taper fully eliminates RNRB at estate value £2,350,000 (£2m + 2 × £175k = £2.35m). Above this, no RNRB is available regardless of property arrangements. The "net estate" for taper purposes is gross assets minus debts and funeral expenses, BEFORE any BPR/APR/spouse-exemption reliefs - which means a £3m family farm receiving full APR still pushes the deceased's net estate above the £2m taper threshold for RNRB purposes.
Worked example scenarios
Six common UK estate scenarios showing how RNRB applies in practice:
| Scenario | Estate | Allowances | IHT | Notes |
|---|---|---|---|---|
| Single widow with £600k estate + home to children | £600,000 | £1,000,000 | £0 | Lifetime widow inheriting full RNRB from late spouse. Combined NRB £325k×2 + RNRB £175k×2 = £1m allowance. Estate £600k entirely tax-free. |
| Single owner £900k estate + home to children | £900,000 | £500,000 | £160,000 | Own NRB £325k + RNRB £175k = £500k allowance. Taxable: £400k × 40% = £160,000 IHT. |
| Couple jointly £1.2m + home to children | £1,200,000 | £1,000,000 | £80,000 | Combined £1m IHT-free via spouse exemption + transferred allowances. Taxable: £200k × 40% = £80,000 IHT (on second death). |
| Single owner £2.5m estate + home to children | £2,500,000 | £325,000 | £870,000 | Taper kicks in: £2.5m exceeds £2m by £500k. RNRB tapered by £500k/2 = £250k → RNRB reduced to £0. Only £325k NRB applies. Taxable: £2.175m × 40% = £870,000 IHT. |
| Couple £2.3m estate + home to children | £2,300,000 | £700,000 | £640,000 | Taper: £2.3m exceeds £2m by £300k. RNRB tapered by £300k/2 = £150k each side → £25k each (£50k combined). Combined allowance £325k×2 + £25k×2 = £700k. Taxable: £1.6m × 40% = £640,000 IHT. |
| Single owner £900k estate, NO qualifying home | £900,000 | £325,000 | £230,000 | No RNRB available without home or with home not passing to direct descendants. Only £325k NRB. Taxable: £575k × 40% = £230,000 IHT. |
Qualifying conditions in detail
Three conditions all required for the RNRB to apply at full value:
- Qualifying residential interest — the deceased owned an interest in a property that was at any time their main residence. Buy-to-let properties never lived in by the deceased do NOT qualify. Holiday homes never used as main residence do NOT qualify. Where there are multiple residences in ownership history, the personal representatives nominate one for RNRB purposes (typically the most valuable).
- Passes to direct descendants — children (biological/adopted), step-children of the deceased's spouse, foster children with clear parental relationship, grandchildren, great-grandchildren, and spouses/civil partners of any of the above. NOT siblings, nieces, nephews, cousins, unmarried partners, friends. Will trusts holding the residence interact with this in complex ways - specialist advice essential.
- Estate within £2 million — if the deceased's net estate exceeds £2 million, the RNRB tapers as described above. Above £2.35m the RNRB is entirely eliminated.
The downsizing addition
The downsizing addition preserves RNRB where the deceased downsized (moved to a less valuable property) or sold the main home entirely (e.g. moved to rented accommodation or care home) on or after 8 July 2015. Without the addition the RNRB would be capped at the value of the smaller (or non-existent) residence at the date of death.
Requirements: (1) downsizing occurred on or after 8 July 2015, (2) the deceased had an interest in the original property at some point on or after 8 July 2015, (3) the net value transferred to direct descendants on death (cash, investments, smaller property) is at least equal to the downsizing addition claimed. Form IHT435 claims the addition. The addition does NOT reverse RNRB taper — if the estate exceeds £2m, taper applies regardless of downsizing history.
Worked example. An 80-year-old widow sells her £600,000 family home and moves to a £200,000 retirement flat in 2024. She dies in 2026 leaving the £200,000 flat plus £300,000 of investments to her two children. Without the downsizing addition the RNRB would be capped at the £175,000 standard amount (because the £200,000 flat exceeds the RNRB anyway). With the downsizing addition applied via Form IHT435, the full £175,000 RNRB is available, and the £500,000 estate sits entirely within NRB (£325k) + RNRB (£175k) = £500k allowance. Zero IHT. Without the addition (or in a more complex case where the downsized property is below RNRB), the IHT outcome could differ materially.
Frequently asked questions
What is the Residence Nil Rate Band (RNRB)?
The Residence Nil Rate Band is an extra UK Inheritance Tax allowance of £175,000 per individual that applies when a "qualifying residential interest" (the deceased's main home or one of them) is passed on death to "direct descendants" (children, step-children, adopted children, foster children, grandchildren, great-grandchildren). It sits on top of the standard £325,000 Nil Rate Band. A single homeowner with children can therefore pass up to £500,000 IHT-free. A married couple where both have unused allowances can pass up to £1,000,000 IHT-free on the second death (£325,000 + £175,000 each, transferred between spouses). The RNRB was introduced from 6 April 2017 by Section 9 Finance (No. 2) Act 2015 and was phased in: £100,000 (2017/18), £125,000 (2018/19), £150,000 (2019/20), £175,000 (2020/21 onwards). It is currently frozen at £175,000 through 5 April 2030.
How does the £2 million estate taper work?
The RNRB is tapered (reduced) where the deceased's net estate exceeds £2 million. The reduction is £1 of RNRB for every £2 of estate value over the £2 million threshold. A net estate of £2.35 million exceeds the threshold by £350,000, triggering a reduction of £175,000 — which entirely eliminates the RNRB. So in practice the RNRB phases out completely between £2 million and £2.35 million of net estate value (£2m + 2×£175k = £2.35m). Above £2.35m no RNRB is available. The "net estate" for taper purposes is the gross value of all assets less debts and funeral expenses, but BEFORE any reliefs (BPR, APR, spouse exemption). The £2 million taper threshold is per individual and is currently frozen through April 2030. For married couples each spouse's RNRB is tapered separately based on their own estate value at their date of death.
What counts as a "qualifying residential interest"?
A property that the deceased lived in as their main residence at some point during their period of ownership. The key requirements: (1) the property was at any time the deceased's residence (it does not need to be at the date of death — a downsized smaller property or a care-home move with the original home retained both qualify), (2) the deceased owned an interest in the property at the date of death (sole ownership, joint tenants, tenants in common all qualify), (3) the property is included in the deceased's estate (specifically excluded: trust-held property where the deceased had no qualifying interest, life-interest-trust property unless the deceased was the life tenant). Buy-to-let properties NEVER lived in by the deceased do NOT qualify. Holiday homes NEVER lived in as main residence do NOT qualify. Where there are multiple residences across ownership history, the personal representatives nominate one for RNRB purposes — typically the most valuable.
Who counts as a "direct descendant"?
Direct descendants for RNRB purposes are children (biological and adopted), step-children of the deceased's spouse / civil partner, foster children where there was a clear parental relationship, grandchildren (and great-grandchildren and further), and spouses/civil partners of direct descendants (so passing the home to a son's widow qualifies). Specifically excluded: siblings (brothers and sisters), nieces and nephews, cousins, unmarried partners, friends. If the property passes to a discretionary trust where direct descendants are the only beneficiaries, that typically qualifies. If the trust has wider beneficiary classes including non-direct-descendants (e.g. siblings), RNRB is restricted or lost. Specialist advice essential where the will sets up trusts holding the residence.
How does transferable RNRB between spouses work?
If a spouse/civil partner died before 6 April 2017 (before RNRB existed), the survivor automatically receives a notional 100% transferable RNRB at the rate applicable at the surviving spouse's death — so a widow whose husband died in 2010 with no will-based property distribution to direct descendants still inherits a transferable £175,000 RNRB. If the first spouse died after 6 April 2017 and used part of their RNRB (e.g. left home to children worth more than their RNRB), the survivor inherits only the unused portion. If they used 100% of their RNRB, no transferable RNRB is available. Crucially, the transferred RNRB is calculated as the percentage of RNRB unused at first death (NOT the absolute pound amount) and applied to the RNRB rate at the second death — so if the deceased spouse used 50% of a £100,000 RNRB in 2017/18, the survivor inherits 50% of the current £175,000 RNRB = £87,500. Form IHT436 claims the transferable RNRB on second death.
What is the downsizing addition?
The downsizing addition preserves RNRB where the deceased downsized to a less valuable property (or sold their main home entirely and moved to rented or care-home accommodation) on or after 8 July 2015. Without the addition the RNRB would be capped at the value of the smaller (or non-existent) qualifying residence at the date of death. The downsizing addition restores RNRB up to the value lost on downsizing, provided: (1) the downsizing occurred on or after 8 July 2015, (2) the deceased had an interest in the original property at some point on or after 8 July 2015, (3) the net value transferred to direct descendants on death (cash, investments, smaller property) is at least equal to the downsizing addition claimed. The calculation is technical and requires HMRC Form IHT435 to claim. A common scenario: elderly homeowner sells the £600,000 family home, moves to a £200,000 retirement flat. Without the downsizing addition the RNRB would be capped at £175,000 (or less); with the addition the full £175,000 RNRB is available regardless. The downsizing addition does NOT reverse RNRB taper — if the estate exceeds £2m, taper applies regardless.
How is RNRB applied if the home passes via a trust?
Will trusts containing the deceased's residence interact with RNRB in technically-complex ways. Key categories: (1) Immediate Post-Death Interest (IPDI) trust to a direct descendant beneficiary — RNRB available (the IPDI beneficiary is treated as receiving the property absolutely for IHT). (2) Discretionary trust where ALL potential beneficiaries are direct descendants — RNRB available. (3) Discretionary trust with wider beneficiary class (including siblings, friends, charities) — RNRB typically NOT available unless the trust property is appointed out to a direct descendant within 2 years of death under a Deed of Appointment. (4) Trust for minor children with vested interest at age 18 or 21 — RNRB available. (5) "Bare trust" with absolute gift to direct descendants — RNRB available. Specialist solicitor advice essential when drafting wills with residential property held on trust — common errors (wrong trust class, missing direct-descendant exclusivity test) cost £70,000 of unused RNRB.
What is the maximum IHT-free for a married couple with a home and children?
£1,000,000 in 2026/27 for a married couple with a qualifying main residence passing to direct descendants on the second death. The maths: £325,000 NRB × 2 (full transferable on second death) + £175,000 RNRB × 2 (full transferable on second death) = £1,000,000. This requires: (1) both spouses had a full unused NRB at their respective deaths (typically achieved via the standard spouse-exemption pattern where the first death leaves everything to the survivor), (2) both spouses had a full unused RNRB at their respective deaths, (3) the home passes to direct descendants on the second death. The £1m couple-cap is the headline IHT planning figure for typical UK middle-class families with a main residence + children. The cap has been frozen at £1m since 2020/21 and remains frozen through April 2030 per the Autumn Budget 2024.
Does the RNRB apply to lifetime gifts of the home?
No — the RNRB is a death-allowance applied at the date of death. Lifetime gifts of the home (where the donor moves out and never returns, with the donee in occupation as their main home) are Potentially Exempt Transfers (PETs) under the standard 7-year rule, but no RNRB is consumed by the lifetime gift. If the donor survives 7 years the gift is entirely outside the estate. If the donor dies within 7 years, the gift falls back into the estate calculation with taper relief from year 3, but the RNRB is then applied at death against any property still in the estate (which would not include the gifted home if the gift was successful). Common trap: "Gift with Reservation of Benefit" — donor gifts the home but continues to live in it rent-free. Under FA 1986 section 102 the gift fails for IHT purposes — the home stays in the estate, and RNRB applies to it normally. To avoid GROB the donor must either move out entirely or pay full market rent to the donee.
How does RNRB interact with the BPR/APR April 2026 cap?
RNRB applies only to qualifying residential interest passing to direct descendants. BPR (Business Property Relief) and APR (Agricultural Property Relief) apply to qualifying trading-business assets and agricultural property. They are separate allowance structures. Importantly the £2 million RNRB taper uses the "net estate" valued BEFORE BPR/APR reliefs are applied — so a large family farm worth £3m receiving full APR still pushes the deceased's net estate above the £2m taper threshold, eliminating RNRB on any residential property element. The Autumn Budget 2024 introduced a new £1m combined cap on the 100% rate of BPR + APR from 6 April 2026 — that does NOT affect RNRB, which remains at the £175,000 individual / £350,000 couple level subject to the £2m taper. Families with material BR/APR-qualifying assets PLUS a residential property should run the IHT computation carefully because the taper interaction can create surprising outcomes. See our BPR/APR April 2026 changes guide for the new combined cap mechanics.
Will the RNRB be uprated or abolished?
The RNRB is currently frozen at £175,000 per individual through 5 April 2030 — confirmed at the Autumn Budget 2024. The £2 million taper threshold is also frozen through April 2030. The freeze continues "fiscal drag" — as property values rise with inflation, more estates exceed the £2m taper threshold and lose RNRB, materially increasing real-terms IHT take without changing the headline figures. Political risk: no current commitment to abolish RNRB from any major party, but several think-tanks (Resolution Foundation, IFS) have argued the RNRB is a regressive subsidy for property-rich estates that distorts behaviour (e.g. discourages downsizing where the smaller property loses RNRB capacity). Realistic medium-term path: continued freeze through 2030, possibly with downsizing-addition tightening or direct-descendant definition narrowing. The £1m couple-cap (£325k+£175k × 2) has high political visibility and is unlikely to be reduced. Planning advice is to assume the current structure persists at least through 2030.
Do I need to claim RNRB explicitly?
Yes — RNRB is claimed via Form IHT435 (Claim for Residence Nil Rate Band) submitted by the personal representatives as part of the IHT400 estate-administration submission to HMRC. For transferable RNRB (where the first spouse died with unused RNRB), a separate IHT436 claim is also required. Forms must be submitted within 2 years of the end of the month of death. Late claims are accepted in narrow circumstances under section 8M Inheritance Tax Act 1984 — HMRC discretion plus reasonable excuse. The personal representatives nominate which residential property qualifies for RNRB where there are multiple residences in the estate (most valuable typically optimal). The IHT400 calculator on gov.uk does not automatically apply RNRB — the personal representatives must explicitly claim. Specialist legal advice essential for any complex estate with multiple residences, downsizing history, or trust structures.
Related calculators and guides
- Inheritance tax calculator - full IHT computation including NRB, RNRB and 7-year gift taper.
- IHT gift taper calculator - 7-year PET clock and year-3-to-7 taper relief modelling.
- UK Inheritance Tax rules guide - full framework: NRB, RNRB, BPR/APR, pension IHT April 2027.
- BPR & APR April 2026 changes - £1m combined cap on 100% business/agricultural relief from April 2026.
- Family Investment Companies (FIC) guide - inter-generational wealth planning vehicle outside trust regime.
- UK trust tax guide - relevant property trust mechanics including periodic charges.
- UK Non-Dom FIG regime - post-April 2025 IHT 10-of-20 long-term-resident trigger.