The extra £175,000 IHT allowance for passing a home to direct descendants — who qualifies, how to claim it, and how it interacts with the standard nil rate band.
This guide is part of ProbateHelp's Inheritance Tax guide cluster.
Not necessarily. A qualifying home can be closely inherited under a will, intestacy, survivorship or another legal route, but it must pass to direct descendants for the estate to use RNRB. A transfer to a surviving spouse or civil partner can leave an unused percentage available for a later transfer claim; that is separate from using RNRB on the first death.
A downsizing addition may be available if the deceased disposed of or downsized from a qualifying former residence on or after 8 July 2015 and equivalent estate assets are inherited by direct descendants. It is not enough merely to have owned a home at some point.
It depends on the type of trust. Certain trusts can qualify where the home is treated as passing to a direct descendant — for example, an immediate post-death interest for a direct descendant or a bereaved minor’s trust. Others do not. If the will creates a trust, check with a solicitor whether the RNRB still applies.
Not necessarily. The taper reduces the available RNRB by £1 for every £2 over £2 million. If one full £175,000 default allowance would otherwise be available, it reaches nil at £2.35 million. A different extinction point can apply where a transferred percentage changes that default allowance; the qualifying home or share separately caps the amount used.
The RNRB applies to the estate, not separately to each beneficiary. The amount is limited to the lower of the available RNRB and the value of the qualifying home or share inherited by direct descendants, and it may also be reduced by the £2 million taper.
Gather the available death, grant, will, estate and tax records, and ask HMRC what further evidence it requires.