The downsizing addition is a relief that lets an estate still claim residence nil rate band even though the person had sold their home, given it away, or moved to a less valuable one before they died. It exists so that a family is not penalised at inheritance tax simply because an older relative moved to a smaller property or into care.
To use it, the disposal or move must have happened on or after 8 July 2015, the former home must have qualified for the residence nil rate band, and at least some of the estate must pass to direct descendants such as children or grandchildren (gov.uk, as at August 2026, subject to change). This guide explains what the addition is, who can claim it, how it is calculated, and how it is claimed. All figures are current as at August 2026 and are subject to change.
What is the downsizing addition?
The residence nil rate band is an extra inheritance tax allowance, on top of the standard nil-rate band, that applies when a home is left to direct descendants. It is worth up to £175,000 per person for the 2026 to 2027 tax year, and married couples and civil partners can combine two allowances (gov.uk, as at August 2026, subject to change). The catch is that it normally depends on a home actually being in the estate and passing to descendants.
The downsizing addition removes that catch in one specific situation. Where someone has sold up or moved to a cheaper property since 8 July 2015, the residence nil rate band they would otherwise have lost can be restored, as long as other assets of at least equivalent value pass to their direct descendants. It is sometimes called the downsizing allowance, and it is claimed by the personal representatives after death, not set up in advance.
Who can claim the downsizing addition?
An estate can claim the addition where all of the following conditions are met (gov.uk, as at August 2026, subject to change):
| Condition | What it means |
|---|---|
| Timing | The person sold, gave away or moved to a less valuable home on or after 8 July 2015. |
| The former home would have qualified | The property that was sold or given away would itself have qualified for the residence nil rate band had it been kept until death. |
| Descendants inherit | At least some of the estate passes to direct descendants, such as children, grandchildren, stepchildren, adopted or foster children. |
Source: gov.uk, downsizing and the residence nil rate band, as at August 2026, subject to change.
How the downsizing addition is worked out
The addition is designed to replace the residence nil rate band that was lost when the home left the estate. HMRC set out a five-step method (gov.uk, as at August 2026, subject to change):
| Step | Calculation |
|---|---|
| 1 | Find the maximum residence nil rate band available at the date the home was sold or given away, including any transferred from a late spouse. |
| 2 | Express the value of the former home as a percentage of that figure, capped at 100%. |
| 3 | Express the value of any home still in the estate at death as a percentage of the residence nil rate band available at death, again capped at 100%. |
| 4 | Subtract the step 3 percentage from the step 2 percentage. |
| 5 | Multiply the residence nil rate band available at death by the step 4 percentage. The result is the lost band, which forms the downsizing addition. |
The two limits on the addition
The downsizing addition is not open-ended. It is capped in two ways at once (gov.uk, as at August 2026, subject to change):
- The value passing to descendants. The addition cannot exceed the value of the other assets in the estate that are left to direct descendants. If little or nothing passes to them, little or no addition is available.
- The band that would have applied. The addition cannot be more than the maximum residence nil rate band that would have been available had the sale or downsizing never happened.
Because the standard nil-rate band of £325,000 and the residence nil rate band of up to £175,000 are frozen until 5 April 2031, working through these limits carefully can matter more over time as property and estate values rise (gov.uk, as at August 2026, subject to change). Our guide to inheritance tax sets out how these allowances sit alongside the standard 40% inheritance tax rate charged on the value of an estate above the available thresholds (gov.uk, as at August 2026, subject to change).
How the downsizing addition is claimed
The addition is not automatic. The personal representatives claim it as part of administering the estate, using form IHT435 alongside the IHT400 account (gov.uk, claim the residence nil rate band (IHT435), as at August 2026, subject to change).
| Item | Detail |
|---|---|
| Who claims | The executor or personal representative of the estate. |
| Forms | IHT435, submitted with the IHT400 inheritance tax account. |
| Time limit | Within 24 months of the end of the month in which the person died. |
Sources: gov.uk (IHT435) and HMRC Inheritance Tax Manual IHTM43007, as at August 2026, subject to change. Keeping records of the sale price and date of any former home helps the people who deal with an estate, a point covered in our guide to probate.
The £2 million taper still applies
The downsizing addition does not escape the taper that applies to the residence nil rate band generally. Where the estate is worth more than £2,000,000, the available band, including any downsizing addition, is reduced by £1 for every £2 above that threshold (gov.uk, as at August 2026, subject to change). For larger estates this can reduce or remove the benefit entirely, which is one reason some families review the wider position rather than looking at a single relief in isolation. A move to smaller accommodation is often linked to later-life care, and our page on planning for the impact of care fees looks at that separately.
Scotland and Northern Ireland
Inheritance tax, including the residence nil rate band and the downsizing addition, is a UK-wide tax and applies in the same way across Scotland and Northern Ireland. What differs is the surrounding law of succession and estate administration. Scotland has its own rules, including legal rights for a spouse and children, and uses confirmation rather than a grant of probate, while Northern Ireland has a separate but broadly similar system to England and Wales. Where an estate crosses more than one jurisdiction, it can be worth taking advice in each.
- Residence nil rate band: up to £175,000 per person (gov.uk).
- Standard nil-rate band: £325,000 (gov.uk).
- Qualifying date for downsizing: on or after 8 July 2015 (gov.uk).
- Taper threshold: estate value above £2,000,000 (gov.uk).
- Bands frozen until 5 April 2031 (gov.uk).
- Claim deadline: 24 months from the end of the month of death (HMRC).
Frequently asked questions
What is the downsizing addition to the residence nil rate band?
It is a relief that lets an estate claim residence nil rate band even though the person had sold their home, given it away or moved to a less valuable one before death. The disposal must have happened on or after 8 July 2015, and assets of at least equivalent value must pass to direct descendants (gov.uk, as at August 2026, subject to change).
Does the downsizing addition apply if someone sold their home and rented?
It can. The addition is available whether the person moved to a cheaper home or sold up entirely and no longer owned a home at death, provided the sale or gift was on or after 8 July 2015 and other assets pass to direct descendants (gov.uk, as at August 2026, subject to change).
Is there a time limit to claim the downsizing addition?
Yes. The claim is made by the personal representatives on form IHT435 with the IHT400 account, generally within 24 months of the end of the month in which the person died (HMRC, IHTM43007, as at August 2026, subject to change).
Can a downsizing addition be more than £175,000?
For a single person, the addition cannot exceed the maximum residence nil rate band that would have applied, which is up to £175,000 for 2026 to 2027. A surviving spouse or civil partner may have a transferred band as well, and the addition is also capped at the value of assets left to direct descendants (gov.uk, as at August 2026, subject to change).
Does the downsizing addition still apply to very large estates?
It is subject to the same taper as the residence nil rate band. Where the estate is worth more than £2,000,000, the band and any addition are reduced by £1 for every £2 above that figure, so for larger estates the benefit may be reduced or removed (gov.uk, as at August 2026, subject to change).
How do I make sure my family can claim it later?
The addition depends on records of the former home and a will that leaves assets to direct descendants, so keeping the sale details and reviewing the will can help. This is general information, and many people discuss their own position with a qualified professional. You can read our guide to writing a will or arrange a consultation.