At Chiltern Wills LLP, we are often asked who qualifies as a ‘direct descendant’ for the purposes of claiming the residential nil rate band (RNRB) – an important tax relief introduced to reduce the burden of inheritance tax on families passing down the family home.
What Is the Residential Nil Rate Band?
The RNRB is an additional inheritance tax (IHT) allowance available when a residence is passed on to a direct descendant. For the 2024/25 tax year, this band remains fixed at £175,000 per individual, which can be added to the standard nil rate band of £325,000. That means a married couple or civil partners could potentially pass on up to £1 million free of inheritance tax, provided certain conditions are met.
Who Counts as a “Direct Descendant”?
The term “direct descendant” is defined in law for IHT purposes and includes:
- Children (including adopted, fostered, and stepchildren)
- Grandchildren and further lineal descendants
- Spouses or civil partners of those descendants, even if the descendant has predeceased the person leaving the estate
- Children for whom the deceased was appointed as guardian or special guardian while they were under 18
The crucial point is that the RNRB is only available if the residence (or the proceeds from the sale of a former residence) is ‘closely inherited’—i.e. left to someone who meets this direct descendant test.
Who Does Not Qualify?
Importantly, not all relatives qualify. The following individuals are not considered direct descendants:
- Nieces and nephews
- Brothers and sisters
- Friends, carers, or lodgers
- Step-grandchildren (unless formally adopted or under guardianship arrangements)
Leaving your home to someone in this category would not allow your estate to benefit from the RNRB.
Example
Let’s say Mr. and Mrs. Smith own a home worth £600,000. They have one son and one niece. If they leave the home entirely to their son, their estate can benefit from both of their RNRBs, saving up to £140,000 in IHT. However, if they split the inheritance between their son and niece, only the portion going to the son qualifies for the RNRB, potentially leading to a higher tax bill.
Downsizing and the RNRB
Even if you’ve sold your home (for example, to downsize or move into care), your estate can still claim the RNRB if:
- The sale occurred on or after 8 July 2015
- The proceeds form part of your estate
- You leave assets of equivalent value to direct descendants
This is known as the ‘downsizing addition’, and it helps preserve the RNRB even when the property itself is no longer owned.
Why It Matters
With property values remaining high across the UK, ensuring you qualify for the RNRB can make a substantial difference to the amount of inheritance tax your loved ones may need to pay. Careful estate planning is essential to ensure you make full use of this valuable relief.
Get in Touch
If you’re unsure whether your estate qualifies for the RNRB or if you want help drafting a will that maximises tax efficiency, get in touch with Rebecca D’Arcy at Chiltern Wills LLP today. Rebecca specialises in helping families plan with confidence for the future.