Nil-rate band & rates
- Basic nil-rate band £325,000 from 6 April 2009 through 5 April 2031
- Residence nil-rate band £175,000 from 6 April 2020 through 5 April 2030
- Standard rate 40% on the taxable slice above available allowances
← UK Inheritance Tax scenarios
NRB · rank #3
🇬🇧Nil-rate band only
About £210,000 Inheritance Tax on £850k (NRB only, no RNRB).
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Nil-rate band only on £850k
On a £850,000 estate with no RNRB claim, Nil-rate band only models about £210,000 Inheritance Tax (effective 24.71%; total nil-rate allowance £325,000).
Key takeaways
- Nil-rate band only: ≈ £210,000 IHT on £850,000 (NRB only).
- Rank #3 of 3 on £850,000 (lowest tax first).
- Total nil-rate allowance: £325,000; RNRB applied: £0.
- Uses the frozen nil-rate band only (£325,000 until 5 April 2031). Home left to descendants is ignored, so RNRB does not apply.
- Compare with: Married 100%, NRB + RNRB.
Nil-rate band only — overview
Basic £325,000 nil-rate band — no residence relief, no spouse transfer.
Uses the frozen nil-rate band only (£325,000 until 5 April 2031). Home left to descendants is ignored, so RNRB does not apply.
On a £850,000 estate with no RNRB claim, Nil-rate band only models about £210,000 Inheritance Tax (effective 24.71%; total nil-rate allowance £325,000).
Headline maths on £850k
Estate £850,000; home to descendants £0.
NRB available £325,000; RNRB applied £0; taxable £525,000.
Tax due £210,000 at 40% on the taxable slice.
GOV.UK context for this scenario
GOV.UK: there is normally no IHT if the estate is below £325,000, or if everything above the threshold goes to a spouse, civil partner, charity, or community amateur sports club.
This vignette isolates NRB-only maths — no spouse exemption, no RNRB claim — so tax is 40% of the slice above £325,000.
Estate ladder
The ladder recomputes the same scenario at £400k–£2.5m. For RNRB scenarios, home to descendants is min(estate, £400k).
Above £2m, RNRB taper can erase residence relief even when a qualifying home gift exists (GOV.UK RNRB guidance).
Official rules for this scenario
Drawn from the GOV.UK / HMRC pages linked below. This vignette is an education model, not a personal tax computation.
When there is normally no IHT
- Estate below the £325,000 threshold
- Everything above the threshold left to a spouse, civil partner, charity, or community amateur sports club
- Home left to children/grandchildren can raise the threshold toward £500,000
Lifetime gifts (educational — excluded from vignettes)
- 7-year rule: gifts more than 7 years before death are usually outside the estate (trusts aside)
- Annual exemption £3,000 per tax year (one-year carry-forward)
- Small gifts ≤ £250 per person; wedding gifts up to £5,000 to a child / £2,500 grandchild / £1,000 other
- Taper relief (32%→8%) only if 7-year gifts exceed the nil-rate band
- Gifts with reservation (e.g. giving a home but still living there rent-free) stay in the estate
Scoreboard (£850k)
Rank
#3
Tax due
£210,000
Total allowance
£325,000
RNRB applied
£0
Effective 24.71%. Basic £325,000 nil-rate band — no residence relief, no spouse transfer.
Estate ladder — NRB only
| Estate | Home to descendants | Allowance | Tax due |
|---|---|---|---|
| £400,000 | £0 | £325,000 | £30,000 |
| £500,000 | £0 | £325,000 | £70,000 |
| £650,000 | £0 | £325,000 | £130,000 |
| £850,000 | £0 | £325,000 | £210,000 |
| £1,000,000 | £0 | £325,000 | £270,000 |
| £1,500,000 | £0 | £325,000 | £470,000 |
| £2,500,000 | £0 | £325,000 | £870,000 |
Compare with other scenarios
Myths vs facts
“Everyone gets a £1 million Inheritance Tax allowance.”
Only when both spouses fully transfer unused NRB and RNRB and a qualifying home goes to direct descendants. The married vignette reaches £1,000,000 allowance on £850k — tax £0.
“Owning a home automatically unlocks RNRB.”
The residence (or a share) must pass to direct descendants. NRB-only scenarios set home to £0 to show tax without RNRB. Source: GOV.UK — Passing on a home.
“Nil-rate bands rise with inflation every year.”
NRB (£325k) is frozen until 5 April 2031; RNRB (£175k) is listed through 5 April 2030 on the GOV.UK rates table.
“IHT is always 40% of the whole estate.”
Only the slice above available nil-rate allowances is taxed at 40% (or 36% with a qualifying charity gift — not on this hub vignette).
“Spouse transfers happen automatically with no claim.”
HMRC requires a transfer of unused bands claim on the second death (GOV.UK transferring unused basic threshold / IHT402).
“RNRB still applies fully above £2 million.”
RNRB tapers £1 for every £2 over £2,000,000 and can fall to zero.
“Leaving the home to a niece unlocks the £500k threshold.”
RNRB needs direct descendants (children/grandchildren and listed relationships) — not nieces, nephews or siblings (HMRC RNRB guidance).
“If the home is worth less than £175k, unused RNRB shelters other assets on this death.”
Unused RNRB on this death cannot be set against other assets — but unused RNRB may transfer to a surviving spouse/civil partner (GOV.UK RNRB guidance).
Concepts
Nil-rate band vs residence nil-rate band
NRB (£325,000) is the basic death-estate threshold. RNRB (up to £175,000) is extra only when a qualifying home/share passes to direct descendants.
Chargeable estate
Net estate after debts, then minus spouse/civil partner and charity exemptions. This hub sets those exemptions to £0 so allowance corridors stay comparable.
Effective rate on this hub
Tax due ÷ estate value on the vignette. It is not a marginal rate and is not a personal tax computation.
Why married transfer can hit £0 at £850k
100% unused NRB + RNRB transfer with a home gift yields up to £1,000,000 of allowances before taper — enough to cover the £850k vignette.
Planning notes (education, not advice)
Match GOV.UK thresholds to the death date
NRB £325,000 is listed through 5 April 2031; RNRB £175,000 through 5 April 2030. Always check the rates table for the year of death.
RNRB needs the right beneficiaries
Leaving the home to a friend, sibling, or niece/nephew typically does not unlock RNRB — use HMRC’s direct-descendant list.
Transfers need a claim within 2 years
Unused bands are not automatic. GOV.UK requires a claim within 2 years of the second death (probate paths / IHT400 + IHT402 on full returns).
Watch the £2m taper
Estates above £2m lose RNRB at £1 per £2. Re-run the ladder before assuming the £500k or £1m corridor still applies.
Keep gift records
Executors need records of gifts in the 7 years before death (what, who, value, when) — GOV.UK gifts guidance. This hub does not model PETs.
This is education, not advice
GOV.UK and HMRC cannot give tax-planning advice on these pages; neither can this hub. Complex estates need a solicitor or tax adviser.
Glossary
- Nil-rate band (NRB)
- Basic Inheritance Tax threshold of £325,000 (frozen until 5 April 2031 on the GOV.UK rates table).
- Residence nil-rate band (RNRB)
- Extra allowance up to £175,000 when a home/share passes to direct descendants (GOV.UK rates table lists £175,000 through 5 April 2030).
- Direct descendants
- Children, grandchildren and other lineal descendants; spouses/civil partners of lineal descendants; plus step, adopted, foster and certain guardian relationships — see HMRC RNRB guidance.
- Transferable NRB / RNRB
- Unused percentage of a late spouse or civil partner’s NRB and RNRB that can be claimed on the second death (up to 100%). Requires a claim (GOV.UK transfer guidance).
- RNRB taper
- £1 reduction in available RNRB for every £2 of estate above £2,000,000 (estate value before spouse/charity exemptions).
- Chargeable estate
- Net estate after debts, minus spouse/civil partner and charity exemptions (exemptions not used on this hub vignette).
- Spouse / civil partner exemption
- Transfers to a spouse or civil partner are generally exempt from IHT (GOV.UK overview / passing on a home). Extra limits can apply if the recipient spouse is not UK-domiciled.
- Gift with reservation
- A gift you still benefit from (for example giving away a home but living there rent-free) usually stays in the estate (GOV.UK gifts / passing on a home).
- 7-year rule
- Most lifetime gifts fall out of account if you live 7 years after giving them; dying earlier can bring gifts back into the IHT computation (GOV.UK gifts).
- Annual exemption
- Up to £3,000 of gifts per tax year can be given free of IHT, with one year of unused exemption carried forward (GOV.UK gifts).
- Standard rate
- 40% on the taxable amount above available nil-rate allowances.
- Charity reduced rate
- 36% may apply if 10% or more of the net estate is left to charity — not used on this hub’s vignettes (GOV.UK overview).
- Effective rate
- Tax due ÷ estate value on the vignette.
- Combined corridor
- Single person with full RNRB: up to £500,000. Married with full transfers: up to £1,000,000 before taper.
FAQ — NRB only
About £210,000 (effective 24.71%; total allowance £325,000).
Home to descendants: £0. Transferred NRB: 0%. Transferred RNRB: 0%.
Rank #3 of 3 by tax due ascending on the headline vignette.
NRB only vs Married 100%; NRB only vs NRB + RNRB.
NRB-only does not claim RNRB, so residence taper does not change this scenario’s tax.
To isolate the basic £325k threshold without an RNRB claim. Owning a home does not unlock RNRB unless a qualifying share passes to direct descendants (GOV.UK — Passing on a home).
GOV.UK rates table: NRB £325,000 through 5 April 2031; RNRB £175,000 through 5 April 2030.
Open /inheritance-tax-calculator/uk and enter your estate, home to descendants, and transfer percentages.
Validation notes
- £500,000 NRB-only → £70,000 tax ( (£500k − £325k) × 40% ) — matches GOV.UK overview example.
- £500,000 with home ≥ £175k to descendants → £0 tax (full £500k corridor).
- £490,000 with £300k home to children → £0 tax — matches HMRC RNRB guidance worked pattern.
- £500,000 with £100k home to descendants → taxable £75k → £30,000 tax (RNRB capped at home value).
- £650,000 with 100% NRB transfer and no RNRB → £0 tax (double NRB = £650k).
- Headline £850k NRB-only → £210,000; NRB+RNRB → £140,000; married 100% transfer → £0.
- NRB freeze through 5 April 2031 and RNRB £175k through 5 April 2030 come from the GOV.UK rates table (not the older RNRB guidance page’s CPI wording).
- All hub figures call calculateInheritanceTaxUk — same engine as /inheritance-tax-calculator/uk.
By Sammy S. · Founder · AuthorUpdated for 2026