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Form IHT435 is the schedule you file with Form IHT400 to claim the Residence Nil-Rate Band (RNRB) — the additional inheritance tax allowance, up to £175,000 per person, that applies when a qualifying residential interest in the family home passes to direct descendants on death. Miss it and an estate that should pay no inheritance tax can end up handing HMRC a six-figure bill. Get it right and a married couple’s estate can pass up to £1 million tax-free.
Don’t lose £175,000 to a paperwork slip.
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When Do You Need This?
When completing IHT for a person who died owning — or having owned — a home passing to children, stepchildren, grandchildren, adopted or fostered children, or other direct descendants. If the estate is not automatically tax-free (value over £325,000 NRB or estate over £2 million), you must claim RNRB actively. HMRC does not apply it automatically.
Typical scenarios: widowed parent leaving family home to adult children; single person passing to grandchildren under will; estate where home was sold to move into care (downsizing still applies); jointly owned home deceased’s share passing to descendants.
Also needed where deceased’s spouse died first without using RNRB — IHT435 paired with IHT402. Couple can shield up to £350,000 via RNRB alone + £650,000 via combined NRB = £1m tax-free.
What IHT435 Involves
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Supporting schedule to IHT400 — not standalone. Tests two things: qualifying residential interest (QRI); closely inherited by direct descendant. Both pass = RNRB applies. Estate over £2m: taper reduction £1 lost per £2 over.
RNRB introduced Finance (No. 2) Act 2015, phased in from April 2017: £100k (2017-18), £125k (2018-19), £150k (2019-20), £175k (2020-21 onwards).
Fees
No HMRC fee for IHT435. Probate fee: £300 for estates over £5,000. Real cost of getting wrong: 40% on £175,000 = £70,000 tax. Double with spouse’s TRNRB: £140,000.
How to Complete It
Box 1-3: Deceased’s details
Full name, date of death, IHT reference. Must match IHT400 exactly.
Box 4: Residence in estate?
Tick yes if deceased owned any interest in a dwelling at death — freehold, leasehold, beneficial share. Holiday home or buy-to-let does not qualify unless deceased lived in it as residence. If no: move to downsizing.
Box 5-7: Qualifying residential interest
Property description, open-market value at death, deceased’s share. Joint tenants: 50% (or equal share). Tenants in common: recorded beneficial share. Same valuation as IHT400 — HMRC cross-checks.
Box 8-10: Direct descendants
Strict statutory definition (s.8K IHTA 1984): children (including adopted, stepchildren, formally fostered), grandchildren, further issue. Also: spouse/civil partner of direct descendant; widow/widower of pre-deceased direct descendant (not remarried).
NOT direct descendants: nieces, nephews, siblings, friends. If home passes to them: no RNRB.
Box 11-13: How property passes
Must be “closely inherited”: on death, by will, intestacy, survivorship, qualifying trust. Outright gifts and life interests qualify. Discretionary trusts generally do NOT unless: bereaved minor’s trust, 18-to-25 trust, immediate post-death interest, or disabled person’s trust.
Box 14-17: RNRB calculation
Maximum 2026: £175,000. Actual available = lower of: (a) value of QRI passing to descendants, (b) £175,000 cap. Estate over £2m: apply taper (£1 RNRB lost per £2 over). Estate £2.35m+: RNRB wiped out entirely.
Box 18-22: Downsizing addition
If deceased downsized, disposed of, or ceased owning a QRI on or after 8 July 2015, and current estate no longer contains QRI worth full £175,000: downsizing addition may preserve lost allowance. Need: value of former residence at disposal, deceased’s share, evidence equivalent-value assets (or proceeds) pass to direct descendants.
Key Deadlines
- IHT400 with IHT435: 12 months from end of month of death
- IHT payment: 6 months from end of month of death (interest after)
- RNRB claim: 2 years from end of month of death (HMRC discretion to extend but don’t rely)
- Downsizing disposal: must be on/after 8 July 2015
What Happens After You File
HMRC processes IHT400 and schedules together. In order: IHT421 probate summary to Probate Registry, grant issued. Questions (property valuation, beneficial shares, trust qualifying): HMRC writes, grant clock stops.
Compliance check window: 4 years (6 careless error, 20 deliberate). Keep every document. Dispute route: 30 days to appeal via statutory review, then First-tier Tribunal (Tax).
Common Mistakes
- Assuming RNRB is automatic. It is not. File the schedule even if tax-free — surviving spouse’s estate will need the record for IHT436 transferable claim.
- Getting “direct descendant” wrong. Niece not included. Informal fostering not included. Check s.8K IHTA 1984.
- Over-valuing the QRI. £400k home, half to spouse (spouse exemption), half to children: QRI to descendants is £200k, capped at £175k.
- Missing the taper. £2.3m estate: RNRB reduces by £150k to £25k.
- Discretionary trust as beneficiary. Often kills RNRB. Deed of variation within 2 years may rescue — narrow window, precise drafting.
The Rules That Apply
- IHTA 1984 ss.8D–8M — core RNRB regime (inserted by Finance (No. 2) Act 2015)
- s.8E IHTA 1984 — main RNRB computation
- s.8FA–8FE IHTA 1984 — downsizing addition
- s.8G IHTA 1984 — transferable RNRB (IHT436 mechanism)
- s.8K IHTA 1984 — definition of “closely inherited” and “direct descendant”
How Chris Can Help
IHT435 sits inside the most paperwork-heavy application in English probate — IHT400 runs to 24 pages with up to 18 schedules. One missed box, one misapplied definition, family loses £70,000. Chris drafts IHT435 as part of full IHT400 bundle, cross-references every figure, applies taper, builds downsizing calculation if relevant.
When the person behind eLitigant navigated their own family probate, a solicitor quoted £1,200 and took two years without resolution. Sitting down with Chris for an afternoon, the forms were drafted, the estate closed in three weeks. That experience is why eLitigant exists.
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Complex estates (multiple properties, overseas, Business Property Relief with RNRB): Hybrid £1,000 with reviewer sign-off.
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FAQ
Family home to stepchildren?
Yes. Stepchildren, adopted, formally fostered all included under s.8K.
Mother sold home to move into care?
Yes via downsizing addition (disposal on/after 8 July 2015). Complete boxes 18-22.
Estate worth £2.4m — any RNRB?
No. Taper wipes it out at £2.35m+.
Home passes into discretionary trust?
Generally no RNRB. Exceptions: bereaved minor’s trust, 18-to-25, immediate post-death interest, disabled person’s. Deed of variation within 2 years may rescue.
Transfer late spouse’s unused RNRB?
Yes via IHT436, filed with IHT435. Married couple with home to children: £350k RNRB + £650k NRB = £1m tax-free.
Buy-to-let qualifies?
Only if deceased lived in it as residence at some point. Pure investment property does not qualify.
No will?
Yes if intestacy rules pass home to direct descendant. Children inherit after statutory legacy so often applies.
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