Residence nil-rate band after taper.
Available residence nil-rate band
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Total tax-free band (with £325k NRB)
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An extra band, but only if a home passes to your children
The residence nil-rate band is a second slice of inheritance tax allowance worth up to £175,000, sitting on top of the standard £325,000 nil-rate band. It was introduced to ease the squeeze on family homes as property values climbed. The catch in the rules is precise: it applies only when a residence, or assets up to its value, passes on death to direct descendants. That means children, including step, adopted, and foster children, and grandchildren. Leave the house to a sibling, a niece, or a friend and the residence band is lost entirely, even though the ordinary £325,000 still applies. This calculator focuses on the part that catches large estates out, the taper that erodes the residence band once an estate grows beyond £2 million.
A £2.2 million estate after taper
Consider a single person dying with an estate of £2.2 million who leaves their home to their children. The estate sits £200,000 above the £2 million taper threshold. The residence band is cut by £1 for every £2 of that excess, so it loses £100,000 and falls from £175,000 to £75,000. Added to the £325,000 standard band, the total tax-free allowance is £400,000.
| Step | Amount |
|---|---|
| Estate value | £2,200,000 |
| Excess over the £2,000,000 threshold | £200,000 |
| Taper reduction (£200,000 divided by 2) | £100,000 |
| Residence band (£175,000 less £100,000) | £75,000 |
| Total band with £325,000 nil-rate band | £400,000 |
The taper is unforgiving. Because the residence band starts at £175,000 and falls £1 for every £2 of excess, it disappears completely once an estate reaches £2.35 million. The chart traces the band from its full value down to zero across that £350,000 window.
Doubling up through a late spouse
Married couples and civil partners get a powerful advantage. When the first partner dies leaving everything to the survivor, that transfer is exempt, and the deceased's unused residence band can be transferred to the survivor's estate. Tick the transfer option in the tool and both the residence band and the standard nil-rate band double, to a potential £350,000 and £650,000, giving a combined £1 million of allowance on the second death. The threshold for the taper, though, does not double. It stays at £2 million per estate, which is why a wealthy widow or widower can still see the inherited residence band tapered away on their own death. This tool is for executors and individuals planning their estate who need to know what allowance will actually be available after the taper bites.
Why unmarried couples lose out, and how to claim
The transfer that doubles the band only works between spouses and civil partners. An unmarried couple, however long they have lived together, cannot pass an unused residence band from the first death to the survivor. When the first partner dies their residence band is used against their own estate and any unused portion is simply lost, so a cohabiting couple can end up with substantially less combined allowance than a married couple with identical wealth. It is one of the starkest financial penalties the tax system still imposes on cohabitation, and for couples with a valuable home it is a strong practical argument for marriage or civil partnership, or for more active lifetime planning. When the time comes to claim, the executors do not get the residence band automatically; they must claim it on form IHT435, with the transfer of a late spouse's unused band claimed on form IHT436, both submitted alongside the main inheritance tax account.
Estate planning questions
What if I have already sold my home and moved into care?
You may still keep the band through the downsizing rules. If you sold or downsized your home on or after 8 July 2015 and left assets of equivalent value to your direct descendants, HMRC allows a downsizing addition so the residence band is not lost simply because you no longer own a qualifying property at death. The executors claim it on the inheritance tax return.
Does leaving the home to a discretionary trust still qualify?
Usually not. The residence band requires the home to pass to direct descendants outright or through certain qualifying trusts such as a bereaved minor or immediate post death interest trust. A standard discretionary trust, even one whose beneficiaries are your children, normally fails the test and forfeits the band. This is a frequent and expensive drafting error in older wills.
A planning tip that matters for estates near the threshold: assets given away more than seven years before death fall out of the estate and can pull its value back under £2 million, restoring some or all of the tapered residence band. For an estate hovering around £2.1 to £2.3 million, a well timed lifetime gift can be worth far more than its face value, because it both removes the gift and rescues residence band that would otherwise vanish.