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
RNRB · rank #2
🇬🇧NRB + residence nil-rate
About £140,000 Inheritance Tax on £850k with £400k home to direct descendants.
🇬🇧
NRB + residence nil-rate on £850k
On a £850,000 estate with £400,000 home to direct descendants, NRB + residence nil-rate models about £140,000 Inheritance Tax (effective 16.47%; total nil-rate allowance £500,000).
Key takeaways
- NRB + residence nil-rate: ≈ £140,000 IHT on £850,000 with £400,000 home to descendants.
- Rank #2 of 3 on £850,000 (lowest tax first).
- Total nil-rate allowance: £500,000; RNRB applied: £175,000.
- Adds the residence nil-rate band (up to £175,000) when a qualifying home/share passes to children or other direct descendants — combined corridor up to £500,000 for a single person.
- Compare with: Married 100%, NRB only.
NRB + residence nil-rate — overview
NRB £325k + RNRB up to £175k when a home (or share) goes to direct descendants.
Adds the residence nil-rate band (up to £175,000) when a qualifying home/share passes to children or other direct descendants — combined corridor up to £500,000 for a single person.
On a £850,000 estate with £400,000 home to direct descendants, NRB + residence nil-rate models about £140,000 Inheritance Tax (effective 16.47%; total nil-rate allowance £500,000).
Headline maths on £850k
Estate £850,000; home to descendants £400,000.
NRB available £325,000; RNRB applied £175,000; taxable £350,000.
Tax due £140,000 at 40% on the taxable slice.
GOV.UK context for this scenario
GOV.UK: leaving a home (or share) to children or grandchildren can raise the threshold toward £500,000 when the estate is on the right side of the £2m taper path.
RNRB applied is the lower of the home to direct descendants and available RNRB. Unused RNRB on this death cannot shelter other assets beyond that cap.
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
Passing on a home
- No IHT when the home passes to a spouse or civil partner
- Home left to anyone else counts toward the estate
- RNRB needs children/grandchildren (incl. adopted, foster, step); full extra band when the estate is not more than £2m (taper starts above £2m)
- Living rent-free in a gifted home is usually a gift with reservation
Residence nil-rate band
- RNRB applied is the lower of the home (or share) to direct descendants and available RNRB (max £175,000 before transfer)
- Taper: £1 reduction per £2 of estate above £2,000,000
- Unused RNRB can transfer to a surviving spouse/civil partner
- RNRB does not shelter lifetime gifts the way NRB can
Scoreboard (£850k)
Rank
#2
Tax due
£140,000
Total allowance
£500,000
RNRB applied
£175,000
Effective 16.47%. NRB £325k + RNRB up to £175k when a home (or share) goes to direct descendants.
Estate ladder — NRB + RNRB
| Estate | Home to descendants | Allowance | Tax due |
|---|---|---|---|
| £400,000 | £400,000 | £500,000 | £0 |
| £500,000 | £400,000 | £500,000 | £0 |
| £650,000 | £400,000 | £500,000 | £60,000 |
| £850,000 | £400,000 | £500,000 | £140,000 |
| £1,000,000 | £400,000 | £500,000 | £200,000 |
| £1,500,000 | £400,000 | £500,000 | £400,000 |
| £2,500,000 | £400,000 | £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 + RNRB
About £140,000 (effective 16.47%; total allowance £500,000).
Home to descendants: £400,000. Transferred NRB: 0%. Transferred RNRB: 0%.
Rank #2 of 3 by tax due ascending on the headline vignette.
NRB + RNRB vs Married 100%; NRB + RNRB vs NRB only.
Yes — above £2,000,000 available RNRB shrinks (£1 per £2). Check the £2.5m ladder row.
Direct descendants under HMRC’s list (children, grandchildren, lineal descendants, and listed step/adopted/foster/guardian relationships) — not nieces, nephews or siblings.
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