What is Residence Nil Rate Band (‘RNRB’)?

5th June 2023

The “Residence Nil Rate Band” (known as RNRB) is an inheritance tax free allowance currently set at £175,000. It applies to estates where the death occurs on or after 6 April 2017. The RNRB could save an estate up to £70,000 in inheritance tax (IHT). IHT is charged at 40% on the value of a person’s estate at the date of their death. The RNRB is available if a person owned their own property and their will or the intestacy rules (which apply when there is no will) leaves their property to certain relatives defined as ‘lineal descendants’.

If a husband or wife leaves their estate to the survivor, the estate qualifies for 100% spouse exemption. Their unused RNRB allowance is preserved and can be transferred to the surviving spouse when they die. This equates to a possible £350,000 IHT-free allowance on the second estate (depending on the value of the property and of the estate at the date of the second death). This provides for a potential £140,000 IHT saving for children or grandchildren.

Unlike the main IHT Nil Rate Band allowance that most of us are aware of and which each individual is entitled to on death, there are a number of requirements for a person’s estate to qualify for the RNRB. These are extensive and quite complicated, however, we cover a few of the main points below to help when considering whether a person’s estate qualifies for the RNRB.

Key points of RNRB:

  • A person must have owned an interest in a property at the date of their death. If they previously owned a property, but sold it before their death, they must have owned that interest in a residence on or after 8 July 2015.
  • The RNRB is limited to the maximum value the person held in a residence. So, if their interest in their home was worth less than £175,000, then only the actual value of the residential interest is allowed (not the full RNRB).
  • The property must be ‘closely inherited’ i.e. a lineal descendant of the person who has died must inherit it. That is, children, grandchildren, great-grandchildren, or a spouse of a lineal descendant. The definition does not include descendants such as nephews and nieces, but does include step-children (although not the children of an unmarried cohabitee). There are others included and excluded in the definition, so it is best to check whether your beneficiaries qualify under the rules.
  • If the value of a person’s estate exceeds £2.35 million, there is no RNRB relief allowed and if the value exceeds £2 million, taper is applied and the relief is reduced by £1 for every £2 that the value exceeds £2 million.
  • The lineal descendant must become beneficially entitled to the residence on the death of the person. This is a really interesting point for parents and grandparents who wish to provide for the next generation and so we expand on this point with the following example.
    • If a husband and wife make wills leaving their estates to each other with the estate passing to their children equally on the second death and with a further provision for the grandchildren to inherit if their parent has by then died, the RNRB allowances should be available. But, there can be a catch! If the will allows for the estate, which includes the residence, to be held on trust then there is a possibility that the RNRB will not be available.
    • As solicitors, we have prepared wills for many clients over many years, and when advising parents and especially grandparents, we often find they are keen to ensure their descendants are old enough and wise enough to inherit their assets and not squander them. Before the introduction of the RNRB this often meant we advised that the estate should be inherited at a particular age (such as 18, 21 or 25), or held in a discretionary trust where it would be at the trustees’ discretion whether and when to pass assets to the beneficiaries.
    • The RNRB legislation states that if a lineal descendant does not inherit directly on the death of the person, so for example, if there is an age specified in the will or discretionary trust provisions, then the RNRB may be lost along with the potential IHT saving of up to £140,000.


In conclusion, the RNRB allowance is beneficial for all who have descendants and who own or have owned their own property. The RNRB reduces the IHT charged on a person’s estate at death, but as touched on above, there are quite a few ways in which the RNRB could be lost. It is therefore a good idea to review your will to ensure the provisions are up to date and work with the new rules. Also, you should take some estate planning advice if your estate value is near to or over the thresholds. Steps can be taken during lifetime and after death to mitigate the IHT position of a person’s estate and so it is always worthwhile taking some legal advice.

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