The residence nil-rate band explained

By SwiftWillUpdated 24 September 2026England and Wales

Quick answer

The residence nil-rate band adds up to £175,000 to the £325,000 inheritance tax threshold when a home, or a share of one, passes on death to children, grandchildren or other direct descendants. It is limited to the value of the home they receive, reduces by £1 for every £2 the estate is worth above £2 million, and any unused amount can pass to a surviving spouse or civil partner.

How much is the residence nil-rate band?

It is £175,000 per person for deaths since 6 April 2020, and it is frozen at that level until 5 April 2031 by Finance Act 2026. It was phased in from £100,000 in 2017 (HMRC thresholds table; Finance Act 2021, section 86, as amended).

Maximum residence nil-rate band by date of death
Date of death	Residence nil-rate band	Taper threshold
6 April 2017 to 5 April 2018	£100,000	£2 million
6 April 2018 to 5 April 2019	£125,000	£2 million
6 April 2019 to 5 April 2020	£150,000	£2 million
6 April 2020 to 5 April 2031	£175,000	£2 million

The band applies to the whole taxable estate, not just the house, but it can never be more than the value of the home that passes to direct descendants. HMRC’s example: a man who died in 2020 to 2021 leaving a £300,000 home and £190,000 of other assets to his children used the full £175,000 residence band and £315,000 of his £325,000 nil-rate band, so no tax was due and £10,000 of nil-rate band was left to transfer to his wife (GOV.UK: work out and apply the residence nil-rate band).

Unlike the ordinary nil-rate band, the residence band cannot be used against lifetime gifts. Gifts in the seven years before death can use up the £325,000, but the residence band still applies to the estate.

Which homes qualify?

A home qualifies if you lived in it as your residence at some time while you owned it, and it is still in your estate when you die (Inheritance Tax Act 1984, section 8H). It does not have to be your last home or your main home.

No minimum period. HMRC says each case depends on its facts: someone who moved in and became ill soon after has lived there, while someone staying a few weeks “out of a suitcase” has not (HMRC manual IHTM46031).
Garden and grounds count with the house.
A share of a home counts, such as your half as tenants in common.
More than one home? Your executors nominate one of them.
A buy-to-let you never lived in does not qualify.
A home abroad can qualify if it is within the scope of inheritance tax, which for deaths from 6 April 2025 depends on whether you were a long-term UK resident (HMRC manual IHTM46032).

A higher threshold does not make the home itself exempt. It raises the amount of the estate that is taxed at 0%.

Who counts as a direct descendant?

For the residence nil-rate band, a direct descendant is:

a child, grandchild or other lineal descendant;
the spouse or civil partner of one of them, or the widow, widower or surviving civil partner of one who died before you, if they have not remarried or formed a new civil partnership by the time of your death;
a child who is, or was at any time, your stepchild;
an adopted child, or a child you fostered at any time;
a child for whom you were appointed guardian or special guardian while they were under 18.

The descendants of stepchildren, adopted and fostered children count too. Nephews, nieces, brothers, sisters, parents and friends do not. The person inheriting can be any age. If a home is shared between a direct descendant and someone else, only the descendant’s proportion counts (Inheritance Tax Act 1984, section 8K).

How does the wording of a will affect it?

The home must be “inherited” by direct descendants, meaning they become entitled to it on your death under your will, the intestacy rules or otherwise. It does not have to be named: a home in the residue counts in proportion to each person’s share. The actual house does not have to reach them either, because a sale by the executors followed by payment of the proceeds still qualifies. Whether a trust counts depends on its type (Inheritance Tax Act 1984, section 8J).

How common will wording affects the residence nil-rate band
What the will says	Does it qualify?
Home, or the residue including it, to my children outright	Yes, for the value passing to them.
Residue half to my son, half to my nephew	Only the son’s half of the home counts.
Home to my grandchildren when they reach 25	No. GOV.UK says a gift that waits until grandchildren reach an age is held in trust and does not qualify.
Home to my own children or stepchildren, held on trust until 18	It can, if the trust meets the conditions for a bereaved minor’s trust: the child becomes absolutely entitled at 18 and nobody else can benefit meanwhile (section 71A).
Home to my own children or stepchildren, held on trust until 21 or 25	It can, if the trust meets the strict conditions for an 18-to-25 trust (section 71D). Take advice on the wording.
A life interest in the home for my daughter	Yes. An immediate life interest for a direct descendant counts.
Home into a discretionary trust for my family	No. A discretionary trust is not one of the qualifying trusts.
Everything to my spouse or civil partner	No residence band is used on the first death because the gift is exempt anyway. The unused band can pass to the survivor’s estate.

If a will gets this wrong, the family can sometimes fix it: a deed of variation made within two years of the death that redirects the home to direct descendants is looked at instead of the original will wording.

SwiftWill wills leave gifts outright. If you choose 21 or 25 as the age young beneficiaries inherit, anyone below that age at your death inherits only if they reach it, and their share is held on trust until then. A share held that way for grandchildren will not attract the residence nil-rate band. A trust for your own children up to 25 can still qualify, but only if it meets HMRC's conditions, which an automated will does not check. If the residence band matters to your estate, ask a solicitor to review the wording. For choosing ages, see writing a will with children.

How does the £2 million taper work?

The residence nil-rate band goes down by £1 for every £2 the estate is worth above £2 million. A single person’s £175,000 band disappears when the estate reaches £2.35 million. A widowed person with a full transferred band of £350,000 loses it all at £2.7 million.

For the taper, the estate is valued before exemptions and reliefs: everything owned less debts, including anything left to a spouse or charity and any business or farm property that qualifies for relief (HMRC manual IHTM46012). Lifetime gifts are not added.

Example from HMRC’s manual: an estate worth £2,200,000 on a death in July 2020, with half passing to a grandson, exceeds the threshold by £200,000. The £175,000 band is reduced by £100,000 to £75,000, which is less than the £250,000 half-share of the £500,000 home that the grandson inherits, so the band is £75,000 (IHTM46027).

The taper can also reduce the unused band passed to a spouse. If the first spouse’s estate is over £2 million, the unused percentage is worked out after tapering, even if they left the home to the survivor.

From 6 April 2027, Finance Act 2026 treats most unused pension funds as part of a person’s estate. On the wording of the Act they will then count towards the £2 million taper threshold as well; HMRC’s detailed guidance for April 2027 has not yet been published. See pensions and inheritance tax.

What if you downsize or sell your home?

You may still get some or all of the band. If you sold, gave away or moved to a cheaper home on or after 8 July 2015, your executors can claim a “downsizing addition” to replace residence band lost as a result. It is the lower of the band lost and the value of other assets left to your direct descendants, so the downsizing rules only help if you leave something to them (HMRC manual IHTM46060).

HMRC’s example: in May 2018 Maurice downsized from a £500,000 house to a flat, which was worth £105,000 when he died in September 2020. He left the flat to his son and £200,000 of other assets to his daughters. The flat supports £105,000 of residence band and the downsizing addition restores another £70,000, giving the full £175,000 (IHTM46063).

The same rules help someone who sold their home to move into a care home. The calculation has several steps and needs a claim on form IHT435.

Can a surviving spouse use the unused band?

Yes. Any residence band not used on the first death can be added to the survivor’s band as a percentage, so a fully unused band doubles the survivor’s to £350,000. If the first death was before 6 April 2017, when the band did not exist, 100% counts as unused unless the first estate was over £2 million (GOV.UK: transferring unused residence nil-rate band).

The survivor’s home does not have to be the one the couple shared. It has to be a home the survivor lived in at some stage that is in their estate, left to direct descendants. The claim is made on form IHT436, usually within two years of the end of the month of the survivor’s death. The full rules are in transferring nil-rate bands between spouses.

How do executors claim the residence nil-rate band?

Value the estate and the home as at the date of death.
Complete form IHT400 with schedule IHT435 to claim the band, and IHT436 to add a late spouse’s unused band (GOV.UK: claim the residence nil-rate band).
Nominate one home if there is more than one, and include downsizing details where relevant.
Use HMRC’s online residence nil-rate band calculator to check the figures.

HMRC applies the band where it is clearly due even without a claim, but a transferred band and a downsizing addition must be claimed (HMRC manual IHTM46004). The executor checklist covers the wider process.

When should you get advice?

Get individual advice from a solicitor or tax adviser if your estate is near or above £2 million, you own more than one home, you want any kind of trust in your will, you plan to give your home away while living in it, or your family includes children from more than one relationship. HMRC’s guidance itself says it cannot give tax planning advice.

SwiftWill’s automated will does not do tax planning. It records who inherits your home and the rest of your estate but does not test whether the residence nil-rate band will apply, and it does not draft life interest or discretionary trusts. See do I need a solicitor for a will? and our inheritance tax guide. For owning a home with someone else, read property owned with a partner.

Sources

Sources checked 24 September 2026.

Which related guide should you read next?

Transferring nil-rate bands between spouses — How a surviving spouse or civil partner uses unused nil-rate and residence nil-rate bands, what 'up to £1 million' requires, and the IHT402 and IHT436 claims.
Inheritance Act claims against an estate — Who can claim under the Inheritance Act 1975, what reasonable financial provision means, the six-month time limit and what Ilott means for adult children.
Inheritance tax explained — How inheritance tax works: the £325,000 and £175,000 allowances, 40% and 36% rates, spouse exemption, payment deadlines and what a will can and cannot change.
Gifts and the seven-year rule — Which lifetime gifts are exempt from inheritance tax, how the seven-year rule and taper relief work, gifts from surplus income and gifts with reservation.

Frequently asked questions

Can I get the residence nil-rate band if I leave my house to my nephew or niece?

No. Nephews, nieces, brothers, sisters and other relatives are not direct descendants. Only a share passing to children, stepchildren, adopted or fostered children, grandchildren and further descendants, or their spouses or civil partners, counts towards the residence nil-rate band.

Do stepchildren count as direct descendants?

Yes. A child who is, or was at any time, your stepchild counts, as do their own children. A stepchild is someone whose parent is or was your spouse or civil partner, so the child of an unmarried partner does not count unless another category applies.

Does the home have to be my main residence when I die?

No. It must be a property you lived in as your home at some point while you owned it, and it must be in your estate when you die. If you own more than one such property, your executors choose which one to use.

What happens if my home is worth less than £175,000?

The residence nil-rate band is limited to the value of the home, or share, that passes to direct descendants. The unused part cannot be set against other assets, but it can be transferred to a surviving spouse or civil partner, or reinstated under the downsizing rules if you sold a more valuable home.

Does the residence nil-rate band still apply if the house is sold after my death?

Yes. The estate can still qualify if the executors sell the home and pass the proceeds to your direct descendants, or if your descendants sell it after inheriting it. What matters is that they became entitled to it on your death.

Will a trust in my will stop the residence nil-rate band?

It depends on the trust. A discretionary trust does not qualify. A life interest for a direct descendant, or a trust for your own child or stepchild that meets the statutory conditions and pays out absolutely at 18 or by 25, can qualify. Gifts to grandchildren that wait until they reach a certain age do not qualify.

Can unmarried couples use the residence nil-rate band?

Each partner can use their own residence nil-rate band if they leave a home to their direct descendants. Unmarried partners cannot transfer an unused band to each other, and gifts between them are not exempt.

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