The residence nil rate band is an extra inheritance tax threshold that applies when a main home passes to children or other direct descendants. For 2026-27 it is 175,000 GBP (HMRC) per person and tapers away for estates above 2 million GBP.
In one line: The residence nil rate band adds extra inheritance tax-free room when a home passes to direct descendants.
How the residence nil rate band works
The band applies on top of the ordinary nil rate band, but only when a qualifying residence is left to direct descendants such as children, stepchildren or grandchildren. It cannot exceed the value of the home itself.
A widow leaving a 400,000 GBP home to her children might combine her own 175,000 GBP (HMRC) residence band for 2026-27 with a transferred band from her late spouse, sheltering a larger share of the property from tax.
For estates worth more than 2 million GBP, the residence band reduces by 1 GBP for every 2 GBP above that figure, so larger estates may lose the relief entirely.
Residence nil rate band vs the nil rate band
The standard nil rate band covers any assets. The residence nil rate band is narrower, requiring a home to pass to direct descendants, and it is withdrawn above a 2 million GBP estate.
Both bands can transfer between spouses and civil partners, so a surviving partner's estate may benefit from up to two of each, materially raising the tax-free total.
Primary source: GOV.UK: Inheritance Tax residence nil rate band