Moving somewhere smaller: do you lose the home allowance?
Selling your home or moving somewhere cheaper doesn't have to lose the home allowance, as long as other things go to your children or grandchildren.
Your answer
Enter what your old home was worth to see how much home allowance you keep.
About this calculator
For anyone who has sold their home, moved somewhere cheaper, or moved into care or in with family since July 2015, and wants to know if their children still get the home allowance.
What happens to your answers
We don’t keep them. Your answers go to our server to do the sums and aren’t stored or logged. If you copy a link to your answers, they’re in the link itself, so only share it with people you trust.
How it’s worked out
Since April 2020 there's an extra £175,000 tax-free (the home allowance, or residence nil-rate band) when your home goes to your children or grandchildren. If you sold a more valuable home on or after 8 July 2015, you can keep the allowance you'd have had (the downsizing addition). We compare your old home with the allowance when you sold it (£100,000 before April 2017, then £125,000, £150,000 and £175,000), and your current home with today's allowance. The difference is the allowance you lost by moving. You get it back as long as at least that much of everything else goes to children or grandchildren. Estates over £2 million lose £1 of allowance for every £2 over.
Worked example
You keep £70,000 of home allowance you'd otherwise lose by moving, saving your family £28,000 in inheritance tax.
Death this tax year · old home sold in the 2018 to 2019 tax year · no allowance passed on from a late partner · the estate goes to family, not a husband, wife or charity
| The home allowance when you sold, in the 2018 to 2019 tax year | £125,000 |
|---|---|
| Your allowance at the time of the move (former allowance) | £125,000 |
| Your old home, £500,000, as a share of that (at most 100%) | 100% |
| Your home allowance now | £175,000 |
| Your current home, £105,000, as a share of that (at most 100%) | 60% |
| Allowance lost by moving: £175,000 × (100% − 60%, not below 0%) | £70,000 |
| Everything else going to children or grandchildren | £600,000 |
| Downsizing addition: the lower of those two | £70,000 |
| Plus the allowance on your current home, which goes to children or grandchildren | + £105,000 |
| Total home allowance | £175,000 |
| Inheritance tax saved by the addition, at 40% on the part of it the estate actually uses | £28,000 |
Worked out using HMRC's downsizing addition method (Inheritance Tax Manual IHTM46060 to IHTM46067) and this tax year's inheritance tax thresholds.
Questions people ask
Is the downsizing addition automatic?
No. Your executors have to claim it, on form IHT435, usually within 2 years of the end of the month of death. They'll need the date your old home was sold and what it was worth.
What if I've moved more than once?
Only one move can count. Your executors choose which one, so try each move here and use the one that keeps the most. We work out one move at a time.
What if I sold my home and now rent or live in a care home?
That still counts. With no home left, the addition can be the whole allowance, as long as enough else goes to your children or grandchildren.
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