Guide
Residence nil rate band: the £175,000 home allowance and its £2m taper
Updated
The full £500,000 single-person threshold everyone quotes is really £325,000 plus a conditional £175,000 that depends on your home, your heirs and your estate staying under £2 million.
Talk to a specialist Your estate under today's rules and the 2027 rules, side by side, in ten seconds.
The conditions
- A home you lived in passes on death to direct descendants, children (including step, adopted and foster) or grandchildren. Nieces, nephews and siblings do not count.
- The band is worth up to £175,000 per person, but never more than the value of the home interest passing, a £150,000 flat supports only £150,000 of RNRB.
- Like the ordinary nil rate band, unused RNRB transfers to a surviving spouse or civil partner, up to £350,000 on the second death (gov.uk: RNRB).
- If you downsized or sold your home after 8 July 2015, a downsizing addition can preserve the band, the calculation needs the sale records.
The £2 million taper
Estates over £2 million lose £1 of RNRB for every £2 of excess. A single person's £175,000 is fully gone at £2.35m; a couple's £350,000 is gone at £2.7m.
| Estate value | RNRB remaining |
|---|---|
| £2,000,000 or less | £175,000 |
| £2,100,000 | £125,000 |
| £2,200,000 | £75,000 |
| £2,350,000 and above | £0 |
Why 2027 makes the taper bite harder
The taper is tested against the estate's value, and from 6 April 2027 that includes unused pension funds. An estate of £1.6m plus a £700,000 pension sits at £2.3m: the pension change does not just add 40% on the pension, it also strips £150,000 off the RNRB, costing a further £60,000 in tax. Use the calculator to see both effects together.
The RNRB does not apply to lifetime gifts, and a home left into some trust structures can fail the "closely inherited" test, check the detailed conditions on gov.uk or with a solicitor when wills involve trusts.