How to Claim the Transfer of Unused Residence Nil Rate Band (RNRB) – A Step-by-Step Guide

The Residence Nil Rate Band (RNRB) is a key inheritance tax (IHT) relief that can significantly reduce the tax burden when passing on a home to direct descendants. If a deceased individual’s spouse or civil partner did not use all of their RNRB, the unused portion can be transferred—potentially doubling the available allowance.

However, this transfer is not automatic and must be claimed using HMRC’s Form IHT436.

This guide explains:

✅ What the Residence Nil Rate Band is
✅ Who needs to complete Form IHT436
✅ How to correctly claim the RNRB transfer

What Is the Residence Nil Rate Band (RNRB)?

The RNRB is an additional tax-free allowance for estates that pass a residence to direct descendants (children, grandchildren, or stepchildren).

RNRB Allowances for 2024/25

• Standard nil-rate band (NRB): £325,000

• Residence nil-rate band (RNRB): £175,000

• Total potential tax-free allowance: £500,000 per person

• For married couples/civil partners: Up to £1 million can be passed on tax-free if both RNRBs are transferred.

Important: If the estate value exceeds £2 million, the RNRB gradually tapers down by £1 for every £2 over the threshold.

Who Needs to Complete Form IHT436?

You Must Submit Form IHT436 If:

✅ You are claiming RNRB for an estate.
✅ The deceased had a spouse or civil partner who passed away first.
✅ The first deceased did not use all of their RNRB.

When You Don’t Need to Complete Form IHT436

❌ The deceased was never married or in a civil partnership.
❌ The spouse/civil partner used all of their RNRB.
❌ The estate is too large (over £2 million, where tapering eliminates RNRB).

How to Complete Form IHT436 – Step-by-Step

To successfully claim the RNRB transfer, follow these steps:

1. Provide the Deceased’s Details

• Full name

• Date of death

• Inheritance Tax reference number (if available)

2. Enter Spouse or Civil Partner’s Information

• Full name of the first deceased spouse/civil partner

• Date of death

• Inheritance Tax reference number (if applicable)

• Confirm if any RNRB was used in their estate:

  • If NO, complete Questions 7-15.

  • If YES, complete Questions 16-22.

3. Work Out the Unused RNRB

✅ If No RNRB Was Used in the First Estate (Questions 7-15)

• Enter the net value of their estate.

• Compare it to the £2 million taper threshold (RNRB is reduced if exceeded).

• Calculate the unused RNRB percentage (often 100% if they died before 2017).

• Multiply this percentage by the current RNRB (£175,000 per person).

✅ If Some RNRB Was Used (Questions 16-22)

• Provide the Default Allowance (or Adjusted Allowance) based on tax law at the time.

• Enter how much RNRB was actually used.

• Deduct this from the total available allowance to determine the unused proportion.

4. Submit the Completed Form

Once finished, send Form IHT436 to HMRC along with IHT400 (the full Inheritance Tax return).

📅 Deadline: The claim must be submitted within 24 months of the end of the month in which the second person died.

Common Mistakes When Claiming RNRB Transfer

To avoid delays or rejections, ensure you:

❌ Meet the deadline – File within two years of death.
❌ Claim both nil-rate bands – Transfer the percentage of unused RNRB, not the old monetary amount.
❌ Account for tapering – Estates over £2 million see a gradual reduction of RNRB.

Why Claiming RNRB Matters for Estate Planning

✅ Reduces inheritance tax liability – Can save families thousands of pounds.
✅ Allows more wealth to pass tax-free – Maximises tax-free allowances.
✅ Simplifies the probate process – Reduces financial burden for beneficiaries.

Claiming the Residence Nil Rate Band transfer is a crucial step in estate planning. By completing Form IHT436 correctly and on time, families can reduce their inheritance tax bill and protect their assets for future generations.

Disclaimer:

The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. While every effort has been made to ensure the accuracy and reliability of the content, the author and publisher make no guarantees regarding the completeness, suitability, or applicability of the information to your individual circumstances.

Before making any financial decisions, particularly regarding investing, pensions and retirement planning, it is strongly recommended that you consult with a qualified financial adviser or professional. Laws and regulations surrounding pensions may vary and are subject to change, so it is important to stay informed and seek personalised guidance tailored to your specific situation.

The author and publisher disclaim any liability for losses or damages incurred as a result of reliance on the information contained in this article.