IHT435 · IHT436

IHT435 and IHT436: the residence nil rate band

Last checked 5 October 2026 against HMRC’s forms, guidance and the law · rules version 2026-10-05.1

As of October 2026, the residence nil rate band (RNRB) adds up to £175,000 to the tax-free amount when a home goes to the children, grandchildren or other direct descendants of the person who died; it applies to deaths on or after 6 April 2017, has been £175,000 since 6 April 2020 and is fixed at that figure until 5 April 2031. You set it out on Schedule IHT435, and claim a late spouse's or civil partner's unused RNRB on Schedule IHT436, which can take it to £350,000 (up to £1 million for a couple, with both nil rate bands). It is reduced by £1 for every £2 the estate is worth over £2,000,000, it never applies to lifetime gifts, and the result in IHT435 box 25 goes to IHT400 box 111 or box 7 of the IHT400 Calculation.

When the residence nil rate band applies

IHT435 lists three conditions (page 1; IHTA 1984 s.8D):

the person died on or after 6 April 2017;
the estate includes a residence they owned: a property they lived in as their home at some point while they owned it. It need not be their main home, and there is no minimum period, but a buy-to-let they never lived in does not count (note 2);
the home, or a share of it, is "closely inherited" by their direct descendants.

The maximum, called the residential enhancement, depends on the tax year of death: £100,000 in 2017 to 2018, £125,000 in 2018 to 2019, £150,000 in 2019 to 2020 and £175,000 from 2020 to 2021 (IHTA 1984 s.8D(5)). Finance Act 2026 section 72 keeps it at £175,000 until 5 April 2031. The current forms still say "2020 to 2028" (IHT435 note 1) and "2020 to 2026" (IHT436 note 2); those end dates are out of date, not the amount.

The RNRB is the lower of the allowance and the value of the home, or share of it, that the direct descendants inherit, after deducting any mortgage (IHTM46020; IHT435 note 6). It is set against the estate before the ordinary £325,000 nil rate band, but never against lifetime gifts, which use the ordinary nil rate band (IHTM46003). If the home is worth less than the allowance, the unused part cannot be used against other assets, though it can pass to a surviving spouse or civil partner.

If there is more than one home, the personal representatives (executors or administrators) choose one (note 5). They can also sell the home and pass on the money: the house itself does not have to end up with the descendants.

Who counts as a direct descendant

Under IHT435 note 3 and IHTA 1984 s.8K:

children, grandchildren, great-grandchildren and later generations;
step-children (whose parent is or was the deceased's spouse or civil partner), adopted and foster children, and children the deceased was appointed guardian or special guardian for while under 18;
the spouse or civil partner of any of these, including a widow, widower or surviving civil partner who had not remarried or formed a new civil partnership before the death.

Nephews, nieces, brothers, sisters and other relatives do not count. The descendants must become entitled at the death: a home held on trust until grandchildren reach a set age does not qualify.

The £2 million taper

The RNRB, including any transferred amount, is reduced by £1 for every £2 by which the estate is worth more than £2,000,000. "Estate" here means everything after debts but before exemptions and reliefs, so what goes to a spouse or charity still counts (IHTM46023; IHT435 box 2). Lifetime gifts are not part of it.

Estate after debts	Reduction	Single RNRB	With a full transfer
£2,000,000	£0	£175,000	£350,000
£2,100,000	£50,000	£125,000	£300,000
£2,200,000	£100,000	£75,000	£250,000
£2,350,000	£175,000	£0	£175,000
£2,700,000	£350,000	£0	£0

Transferring a late spouse's unused RNRB (IHT436)

What transfers is the unused percentage, not the amount (IHT436 note 1), applied to the residential enhancement at the second death (IHTM46040).

First death before 6 April 2017 (questions 7 to 15): there was no RNRB then, so the first estate is treated as having £100,000 unused, which is 100% (IHTA 1984 s.8G(4)). The only reduction is the taper, if that estate was worth more than £2,000,000. For a first estate of £2,050,000, the £100,000 is cut by £25,000, leaving 75%: £131,250 for a death in 2025 to 2026.
First death on or after 6 April 2017 (questions 16 to 22): the unused RNRB is divided by the residential enhancement at the first death. A first spouse with an allowance of £150,000 in 2019 to 2020 who used £90,000 left 40% unused, worth £70,000 now rather than £60,000.
Several late spouses: the percentages add up, but the total is capped at 100% (IHT435 note 12).

The RNRB transfer is separate from the nil rate band transfer, so it can apply even where the first spouse used all of their ordinary nil rate band.

Filling in IHT435 and IHT436

The IHT400 asks for these two schedules to be filled in after box 108, because IHT435 box 3 asks for that figure (IHT400 boxes 29a, 29b and 48).

IHT435 box 1: does any of the estate pass to direct descendants? If No, the RNRB cannot be claimed.
Box 2: the estate before reliefs and exemptions: IHT400 box 91 plus the IHT404, IHT417, IHT418 and IHT403 box 12 figures listed on the form. This is the taper figure.
Box 3: the total chargeable estate from IHT400 box 108.
Boxes 4 to 8: the home: address, value net of mortgage, the percentage passing to direct descendants (to 4 decimal places) and their names.
Boxes 9 to 12: whether part of the home is exempt (for example, left to a spouse) or relieved, and the chargeable value of the descendants' share. If grossing up or interaction applies (box 10; note 9 explains these special calculations, needed for example where the will leaves tax-free legacies and part of the residue is exempt), HMRC works out the RNRB.
Boxes 13 and 14: Yes at box 13 means filling in IHT436; box 14 is the amount from IHT436 box 15 or box 22.
Boxes 15 to 24: the downsizing addition (see below).
Box 25: the result from HMRC's residence nil rate band calculator. Copy it to IHT400 box 111 or box 7 of the IHT400 Calculation.

IHT436 asks for the late spouse's details (questions 1 to 5) and whether any RNRB was used on their death (question 6), then follows one of the two routes above.

Worked example

These figures are invented. A widow died on 17 January 2026. Her husband died on 3 May 2015, leaving everything (£600,000) to her. Her home, worth £520,000 with no mortgage, goes to her son and daughter in equal shares, along with savings and investments of £560,000. Debts and funeral costs are £10,000, so IHT400 boxes 91 and 108 are both £1,070,000.

IHT436: question 6 No; question 7 £600,000; question 8 £2,000,000. As £600,000 is less than £2,000,000, box 13 is 100.0000%, and boxes 14 and 15 are £175,000.

IHT435: box 1 Yes; boxes 2 and 3 £1,070,000; box 4 Yes; box 6 £520,000; box 7 100.0000%; box 9 No; box 13 Yes; box 14 £175,000; box 15 No; box 25 £350,000 (the lower of £350,000 and £520,000).

Her husband's unused nil rate band (100%) also transfers on IHT402, so the IHT400 Calculation reads:

IHT400 Calculation	Amount
Box 3: total nil rate band (£325,000 + £325,000)	£650,000
Box 6: total chargeable estate	£1,070,000
Box 7: residence nil rate band (IHT435 box 25)	£350,000
Box 9: value chargeable to tax	£70,000
Box 10: Inheritance Tax at 40%	£28,000

Without the IHT436 claim, the RNRB would be £175,000 and the tax £98,000.

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Common mistakes

Using the RNRB to decide the estate is excepted. HMRC says the RNRB and any brought-forward (transferred) allowance must not be counted when deciding whether an estate is excepted (Trusts and Estates Newsletter, August 2026). An estate of £450,000 belonging to someone with no spouse or late spouse, where a £300,000 home goes to the children, owes no tax once the RNRB is counted, but it is over the £325,000 limit, so claiming the RNRB means an IHT400 with IHT435. The free check and the guide to excepted estates explain the limits.
Counting nephews, nieces or siblings as direct descendants.
Using the home's full value rather than the value net of mortgage, or the whole home when only a share goes to descendants. A home left to two children and a nephew is 66.6667% closely inherited (IHT435 note 7).
Setting the RNRB against lifetime gifts.
Carrying over the amount, not the percentage, from the first death on IHT436.
Copying the wrong IHT436 box into IHT435 box 14: it is box 15 or box 22. IHT435 note 12 mentions "box 15 or 21", but IHT436 box 21 is the residential enhancement, not the amount transferred.

Downsizing, time limits and next steps

If the person sold, gave away or moved to a less valuable home on or after 8 July 2015, a downsizing addition may make up some of the RNRB lost, provided other assets go to direct descendants (IHT435 note 13). It is claimed in boxes 15 to 24. HMRC's calculator works it out from those figures, and HMRC does the calculation itself where grossing up or interaction applies.

The basic RNRB needs no formal claim (IHTM46004), though it is still set out on IHT435. The brought-forward allowance and the downsizing addition must be claimed within 2 years from the end of the month of death, or 3 months after the personal representatives first act, if later (IHTA 1984 s.8L(2)). For a death on 17 January 2026 that is 31 January 2028. Tax is still due by the end of the sixth month after the month of death (31 July 2026 here).

For the ordinary nil rate band, see transferring a late spouse's unused nil rate band. For valuing the home, see IHT405: houses and land.

Common questions

Who counts as a direct descendant for the residence nil rate band?

Children, grandchildren and later generations, including step-, adopted and foster children, and their spouses or civil partners. Nephews, nieces, brothers and sisters do not count.

How much is the residence nil rate band?

Up to £175,000 for deaths from 6 April 2020, fixed until 5 April 2031, plus up to another £175,000 transferred from a late spouse or civil partner. It is reduced by £1 for every £2 the estate is worth over £2,000,000.

Does the home itself have to go to the children?

No. The personal representatives can sell it as part of the administration and pass the money to the direct descendants, and the estate can still qualify.

Can a late spouse’s residence nil rate band transfer if they died before 6 April 2017?

Yes. Their estate is treated as having £100,000 unused, which is 100%, reduced only if their estate was worth more than £2,000,000. The percentage is applied to the £175,000 band at the second death.

Does the residence nil rate band mean no IHT400 is needed?

No. HMRC says it must not be counted when deciding whether an estate is excepted, so claiming it needs an IHT400 with Schedule IHT435.