Do landlords get the residence nil-rate band?
The residence nil-rate band (RNRB) is an extra Inheritance Tax allowance of up to £175,000 per person when a home the deceased lived in passes to children or grandchildren. It is tapered away by £1 for every £2 the estate exceeds £2 million, so many portfolio landlords lose some or all of it.
Read more in our guide: Retiring from property
RNRB at a glance
| Point | Position |
|---|---|
| Amount | Up to £175,000 per person, frozen to April 2031 |
| Qualifying property | A home the deceased lived in at some point |
| Who must inherit | Direct descendants, including step and adopted children |
| Taper | £1 lost for every £2 of estate over £2 million |
| Fully lost | Estates over £2.35 million (single allowance) |
| Transfer | Unused RNRB passes to a surviving spouse |
How it works
The RNRB sits on top of the standard £325,000 nil-rate band. A married couple leaving their home to their children can pass on up to £1 million free of Inheritance Tax, using two nil-rate bands and two RNRBs. Both allowances are frozen until April 2031.
Buy-to-let property
The RNRB applies to a property that was the deceased's residence at some point, not to properties only ever let. A former home later let out can qualify. In most portfolios only the family home counts, and the relief is capped at that home's value.
The £2 million taper
The taper is based on the whole estate before reliefs and exemptions. A landlord with a £1.5 million portfolio and a £600,000 home has a £2.1 million estate, losing £50,000 of RNRB. From April 2027 most unused pension funds also count towards the estate, which pushes more landlords over the threshold.
Planning points
- Lifetime gifts or a sale of part of the portfolio can bring the estate under £2 million, though gifting property has its own CGT cost.
- Downsizing or selling the home after 8 July 2015 can still preserve the RNRB through the downsizing addition.
- Leaving the home in certain trusts can lose the RNRB; check the will.
Official Sources and Further Reading
General information for landlords in England, checked against official sources in October 2026. It is not tax, legal or financial advice: speak to a qualified accountant or solicitor about your own circumstances.
Frequently Asked Questions
The residence nil-rate band (RNRB) is an extra Inheritance Tax allowance of up to £175,000 per person when a home the deceased lived in passes to children or grandchildren. It is tapered away by £1 for every £2 the estate exceeds £2 million, so many portfolio landlords lose some or all of it.
No. Only direct descendants qualify, such as children, grandchildren, step-children and their spouses.
Yes, a property that was your residence at any time can qualify, if it passes to direct descendants.
It is based on the net estate after debts, but before reliefs and exemptions such as the spouse exemption.
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