How to Complete and File Form IHT435: RNRB, Taper and Downsizing

To complete Form IHT435, you attach it to the main Inheritance Tax return (IHT400), confirm that a qualifying home passes to direct descendants, enter the property value and the share going to those descendants, add any allowance transferred from a predeceased spouse using Form IHT436, and, where relevant, claim a downsizing addition. The schedule lets the estate claim the residence nil rate band, an extra tax-free allowance worth up to £175,000 when a home passes to children or other direct descendants on death. That sits on top of the standard £325,000 nil rate band, and both thresholds are frozen until April 2028.¹ For a married couple or civil partners who both use the full allowance, up to £1 million can pass free of Inheritance Tax.

Check the Claim Is Available Before You Start

Three conditions must all be met. The deceased must have owned a residential property that they lived in at some point during ownership (it need not have been their home at the date of death). That property, or a share of it, must pass to direct descendants on death. And the personal representative must actually make the claim — it is not applied automatically.²

Direct descendants means children, grandchildren, great-grandchildren, step-children, adopted children, and foster children. Spouses or civil partners of those descendants also count. Siblings, nieces, nephews, and friends do not qualify, however close the relationship.³ If the home passes entirely outside that group, there is no claim to make.

The £2 Million Taper

Larger estates lose some or all of the allowance. For every £2 the estate’s net value exceeds £2 million, the available residence nil rate band drops by £1, and an estate worth £2,350,000 or more loses the full £175,000 entirely.⁴ The £2 million threshold is fixed until the end of 2030.⁵

One detail catches people out. The value used for the taper is calculated after deducting liabilities but before applying exemptions and reliefs. Lifetime gifts made within seven years of death are not included in it.⁴ Agricultural property relief or business property relief can bring the chargeable estate well below £2 million, but the taper looks at the value before those reliefs are stripped out.

What to Have Ready Before You Open the Form

A market valuation of the home at the date of death, minus any mortgage or debt secured on it. A professional probate valuation is the safest route, as HMRC can challenge informal estimates.
The name and family relationship of every person inheriting a share of the property, so you can confirm each falls within the direct descendant definition.
Figures from the IHT400, in particular box 91, and any supplementary forms (IHT404, IHT417, IHT418, IHT403) that feed into total estate value.³
If the deceased was widowed, details of the earlier death, so you can work out the transferred allowance on Form IHT436.
If the deceased sold their home, moved to a cheaper property, or gave up homeownership on or after 8 July 2015, the sale details, dates, and values.⁶

Working Through the Form

IHT435 is divided into four blocks. Work through them in order, because later questions build on earlier answers.

Estate Details (Questions 1 to 3)

Question 1 is the gatekeeper: does any part of the estate pass to the deceased’s children or other direct descendants? If the answer is no, the form tells you to stop.³ Question 2 asks for the total value of the estate before reliefs or exemptions, which HMRC uses to check whether the taper applies. Question 3 asks for the total chargeable estate on death, taken from box 108 of the IHT400.

Residence Details (Questions 4 to 12)

Question 4 confirms that a qualifying residential property exists in the estate. Question 5 is where the property address goes. If the deceased owned more than one home, only one can be nominated, and you choose by entering its address here.³ Pick the property that produces the best tax outcome — usually whichever has the higher value passing to qualifying descendants, up to the £175,000 cap.

Question 6 asks for the net value of that residence at the date of death, meaning gross value minus any mortgage. Question 7 records the percentage of the property passing to direct descendants. Question 8 lists those descendants by name and relationship. Questions 9 and 10 handle exemptions, reliefs, and grossing-up, which arise in more complex estates where, for example, part of the home passes to a charity (exempt) and part to children (chargeable). Questions 11 and 12 refine the chargeable value of the residence and the share inherited by descendants.

Transferred Allowance (Questions 13 and 14)

If the deceased’s spouse or civil partner died before them, some or all of the earlier spouse’s unused residence nil rate band can be transferred. Question 13 asks whether you want to make that claim. If yes, complete Form IHT436 separately, which calculates the percentage of unused allowance and converts it into a pound figure.⁷ Enter the resulting figure at question 14 of IHT435.

The transfer is based on percentage unused, not the pound amount. If the first spouse died before April 2017, when the residence nil rate band did not yet exist, their unused percentage is deemed to be 100%.⁸ That percentage is then applied to the maximum allowance available at the date of the surviving spouse’s death (currently £175,000). The total transferred percentage cannot exceed 100%, even if the deceased had more than one predeceased spouse.

Downsizing Addition (Questions 15 to 19)

These questions apply when the deceased sold or gave away their home, or moved to a less valuable property, on or after 8 July 2015. If the deceased no longer owned a qualifying home at death but left other estate assets to direct descendants, a downsizing addition can preserve some or all of the lost allowance.⁶ Question 16 records the address of the former home, question 17 the date of disposal, and question 18 the value of the deceased’s interest at that date, after deducting any mortgage but not sale costs.³

The personal representative must claim the downsizing addition within two years of the end of the month in which the person died.⁶ Miss that window and the addition is lost.

Property Held in Trust

A home left through a discretionary trust does not qualify for the residence nil rate band. HMRC treats transfers into such trusts the same as lifetime gifts for this purpose.² Certain trusts do qualify, provided the beneficiaries are direct descendants:

Immediate post-death interest (IPDI) trusts
Bereaved minor’s trusts and 18-to-25 trusts set up for children on a parent’s death
Disabled person’s trusts
Absolute (bare) trusts

Where an IPDI trust gives a surviving spouse a life interest and the property then passes to the couple’s children, the residence nil rate band remains available on the surviving spouse’s death. If the deceased held a qualifying interest in possession that included a residential property, and that interest ran from the time they became entitled to it until disposal, the disposal is treated as the deceased’s own for downsizing purposes.⁹

Filing the Form

IHT435 is a supplementary schedule and cannot be filed on its own. It goes with the main IHT400 and any other supplementary forms, such as IHT436 for a transferred allowance. Post the full package to:

Inheritance Tax
HM Revenue and Customs
BX9 1HT
United Kingdom

Use tracked delivery. There is no online submission route for the IHT400 and its schedules. You can download and complete IHT435 digitally from GOV.UK, but the final version must be printed and posted.³

Filing the IHT400 without IHT435 attached means overpaying the tax. A refund can be claimed later, but the repayment interest rate HMRC pays is far lower than the rate charged on underpayments, so it is worth getting the schedule in first time.

If You Spot an Error After Filing

If you discover a mistake after posting the return, whether that is a wrong property value, a missing beneficiary, or a miscalculated taper figure, use Form C4 (the corrective account) to amend the return.¹⁰ Download and complete it on screen, then print and post it to HMRC. If the correction means more tax is due, pay the additional amount promptly to limit interest. If it means less tax was owed, HMRC will process a repayment.

1
HM Revenue & Customs. Inheritance Tax nil-rate band and residence nil-rate band thresholds from 6 April 2026 to 5 April 2028
2
HM Revenue & Customs. Work out and apply the residence nil rate band for Inheritance Tax
3
HM Revenue & Customs. HMRC Form IHT435 – Claim for residence nil rate band
4
HM Revenue & Customs. Inheritance Tax Manual – IHTM46023 – Calculating the RNRB: terms used: the taper threshold
5
GOV.UK. Inheritance Tax — thresholds
6
HM Revenue & Customs. How downsizing, selling or gifting a home affects the residence nil rate band
7
HM Revenue & Customs. HMRC Form IHT436 – Claim to transfer any unused residence nil rate band
8
GOV.UK. Transferring unused residence nil rate band for Inheritance Tax
9
HM Revenue & Customs. Inheritance Tax Manual – Downsizing: disposals: qualifying former residential interest: interest in possession trust
10
GOV.UK. Inheritance Tax: corrective account