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The effect of isochronal annealing on the structure and magnetic properties of Cu-free (Fe40.5Co40.5Nb7B12) HITPERM alloy are described herein. Synchrotron x-ray diffraction and Mossbauer study jointly gives an evidence for the presence of atomically ordered α′-FeCo (B2 structure) phase as a nanocrystalline ferromagnetic phase during the first crystallization stage. In the second crystallization stage, alloy becomes fully crystalline with the formation of some hard magnetic boride phases. Being a short range order probe, Mossbauer spectroscopy confirms the development of additional non-magnetic niobate phase in all the nanocrystalline specimens and simultaneous lowering of the volume fraction of ferromagnetic α′-FeCo phase. Thermomagnetic evidence of a recrystallization process during a second transformation stage was also observed.