Taxation (UK) · The liabilities arising on chargeable lifetime transfers and on the death of an individual

Residence Nil Rate Band and Transfer of Unused Bands

Updated 11 October 2026 · Fact-checked

The residence nil rate band (RNRB) is an extra £175,000 band on death. It applies when a home passes to direct descendants, and it is lost at £1 for every £2 the estate exceeds £2,000,000. A surviving spouse or civil partner can add the unused percentage of the first death's nil rate band and RNRB.

Understand Residence Nil Rate Band and Transfer of Unused Bands

Inheritance tax on death is charged at 40% on the part of the estate above your nil rate band of £325,000. The residence nil rate band gives a second band of £175,000. It only applies on death, never to lifetime transfers.

The RNRB is for a home you leave to your children or other direct descendants. The home must be in your death estate and must be one you lived in at some point. The band you can use is the lower of the RNRB and the value of the home (less any debt secured on it) that passes to direct descendants. Leave the home to a nephew or friend and you get nothing.

The RNRB is tapered for large estates. If the estate is over £2,000,000, the band falls by £1 for every £2 of excess. This is a loss of 50p per £1. A single £175,000 band is gone entirely once the estate reaches £2,350,000. A larger band, because of a transferred amount, reaches nil at a higher estate value. A £350,000 band reaches nil at £2,700,000.

The estate used for the taper test is its value after deducting liabilities but before reliefs (such as business or agricultural property relief) and exemptions (such as the spouse or charity exemption). So it can be a trap: an estate that is mostly exempt can still lose the RNRB.

If you downsized or sold your home and so lost part of the RNRB, a downsizing addition can protect the lost amount. The estate must pass assets of equivalent value to direct descendants.

When the first spouse or civil partner dies, any unused part of their bands is not wasted. It is expressed as a percentage. The survivor's bands on their own death are increased by that percentage. This applies to the nil rate band and the RNRB separately.

Key rules to remember

Nil rate band and rates on death: NRB £325,000; RNRB £175,000; death rate 40%; lifetime rate 20%; These figures are in the ACCA tax tables. Tax on death is 40% × (chargeable estate – bands available).
RNRB available: Lower of (RNRB incl. any transfer) and (value of home passing to direct descendants); Use the net value of the home after any debt secured on it. The RNRB only applies on death.
RNRB taper: Reduction = (Estate value – £2,000,000) ÷ 2; Applies only if the estate is over £2,000,000. The estate value is after liabilities but before reliefs and exemptions. Take the reduction off the RNRB, including any transferred amount. The result cannot go below nil.
Unused percentage at first death: Unused % = (Band – band used) ÷ Band × 100; Work out one percentage for the NRB and a separate one for the RNRB.
Transferred band at second death: Band available = Band at second death × (100% + unused %); The unused % is applied to the band in force at the second death, not the first. The increase is capped at 100%, so the band available is at most 200% of the band.
Spouse exemption link: Transfers to a UK-domiciled spouse or civil partner are exempt; The unused band percentage is what lets the survivor use the first spouse's allowances.

How to solve Residence Nil Rate Band and Transfer of Unused Bands questions

Use this order for any question on the RNRB and transferred bands.

1List the death estate and total it. Note the value of the home and who inherits it.
2Check whether the home passes to direct descendants (children, stepchildren, grandchildren and so on). Note the value that does.
3Work out the RNRB: £175,000 plus any transferred percentage from a deceased spouse or civil partner.
4Test the taper. If the estate (after liabilities but before reliefs and exemptions) exceeds £2,000,000, reduce the whole RNRB by half the excess, down to nil.
5Cap the RNRB at the lower of the adjusted RNRB and the value of the home passing to descendants. Consider any downsizing addition.
6Work out the NRB: £325,000 plus the unused percentage of it from the first death, then reduce it by any chargeable lifetime transfers in the seven years before death.
7Deduct both bands from the chargeable estate and charge the excess at 40%. Show the working so you get method marks.

Quickest way: Four-line band check

When to use it: Use this for Section A and OT case questions where you need the tax or the band figure fast.

Write NRB and RNRB side by side: 325,000 and 175,000.
Add unused percentages from the late spouse to each: 100% means double.
Taper the RNRB if the estate is over £2,000,000, then cap it at the home value going to descendants.
Subtract the total from the estate and multiply by 40%. Check you have not applied the taper to the NRB.

Common mistakes in Residence Nil Rate Band and Transfer of Unused Bands

Applying the £2,000,000 taper to the nil rate band as well as the RNRB.
Both are called nil rate bands, so students treat them as one.
Fix: The taper only reduces the RNRB. The £325,000 NRB is never tapered.
Giving the full RNRB when the home goes to a nephew, friend or charity.
Students see a home and the band and assume they apply.
Fix: The home must pass to direct descendants. Check who inherits before claiming any RNRB.
Taking the taper reduction as the whole excess over £2,000,000.
Students forget that the reduction is £1 for every £2.
Fix: Divide the excess by 2. A £400,000 excess reduces the band by £200,000.
Using the whole RNRB when the home is worth less than £175,000.
Students forget the cap.
Fix: Take the lower of the RNRB (adjusted) and the net value of the home passing to descendants.
Transferring a £ amount instead of a percentage of the unused band.
Students copy the £ amount unused at the first death into the second death calculation.
Fix: Convert the unused amount to a percentage of the band, then apply it to the band in force at the second death.
Letting the total transferred band exceed 100% of the band.
Students add percentages from more than one marriage.
Fix: Cap the extra at 100% of the band, giving a maximum of twice the band.

Worked examples

Example 1

Mr Lee died with no surviving spouse. His death estate, after liabilities, was £2,150,000, including his home worth £500,000 that he left to his son. The rest went to a friend, so no reliefs or exemptions applied. He made no lifetime transfers. Calculate the inheritance tax payable on death.

Show the solution

Estate over taper threshold: £2,150,000 – £2,000,000 = £150,000.
Taper reduction: £150,000 ÷ 2 = £75,000.
RNRB after taper: £175,000 – £75,000 = £100,000.
Home to direct descendants is £500,000, which is more than £100,000, so the RNRB is £100,000.
Nil rate band: £325,000. Total bands: £325,000 + £100,000 = £425,000.
Taxable estate: £2,150,000 – £425,000 = £1,725,000.
Tax at 40%: £1,725,000 × 40% = £690,000.

Answer: Inheritance tax payable is £690,000.

Example 2

Mrs Khan died with an estate of £1,200,000 after liabilities, including her home worth £400,000 left to her daughter. The rest went to a nephew, so no reliefs or exemptions applied. Her husband died earlier. He left £65,000 to his son in his will, which used £65,000 of his nil rate band, and the rest of his estate passed to Mrs Khan and was exempt. He made no chargeable lifetime transfers. He owned no home, so none of his RNRB was used. Assume the same band values apply and Mrs Khan made no lifetime transfers. Calculate the inheritance tax payable.

Show the solution

Husband's unused NRB: £325,000 – £65,000 = £260,000. As a percentage: £260,000 ÷ £325,000 = 80%.
Mrs Khan's NRB: £325,000 × (100% + 80%) = £585,000.
Husband's RNRB was entirely unused, so 100% is transferred: £175,000 × 200% = £350,000.
Estate is below £2,000,000, so there is no taper.
Home to her daughter is £400,000, which is more than £350,000, so the RNRB used is £350,000.
Total bands: £585,000 + £350,000 = £935,000.
Taxable estate: £1,200,000 – £935,000 = £265,000.
Tax at 40%: £265,000 × 40% = £106,000.

Answer: Inheritance tax payable is £106,000.

Exam tips

Read who inherits the home first. This often decides whether the RNRB is available.
Always show the taper calculation separately. Even if the final figure is wrong, you earn method marks.
For a transfer from a spouse, turn the unused amount into a percentage first, then apply it to the current band.
In OT questions, check whether the estate figure is before or after the spouse exemption and reliefs, and whether the question asks for tax or the band.
Remember that the RNRB cannot reduce a lifetime transfer calculation. Use it only in death computations.

Practice questions from The liabilities arising on chargeable lifetime transfers and on the death of an individual

Residence Nil Rate Band and Transfer of Unused Bands in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

ACCA Strategic ProfessionalNil Rate Band, Residence Nil Rate Band and IHT Rates

Residence Nil Rate Band and Transfer of Unused Bands: frequently asked questions

What is the residence nil rate band for TX-UK?

It is £175,000 in the ACCA tax tables. It is an extra band on death, available when a home you lived in passes to direct descendants. It is added to the £325,000 nil rate band.

How does the RNRB taper work?

If the estate is over £2,000,000, the RNRB is reduced by £1 for every £2 of the excess. The estate is valued after liabilities but before reliefs and exemptions. A single £175,000 RNRB is lost when the estate reaches £2,350,000. A larger transferred band is tapered in the same way but reaches nil at a higher estate value, up to £2,700,000 for a £350,000 band.

How do I transfer an unused nil rate band to a spouse?

Work out the percentage of the first spouse's nil rate band that was unused at their death. Add that percentage of the nil rate band to the survivor's own band at the second death. The same method applies to the RNRB.

What is the downsizing addition?

It protects the RNRB if someone sold their home or moved to a cheaper one and so lost part of the band. If assets of equivalent value are left to direct descendants, an addition to the RNRB can be claimed. Check the exact figures given in the question.