Inheritance tax on death: nil-rate band and residence nil-rate band

Build the estate calculation as two bands with very different personalities. The nil-rate band of £325,000 is unconditional: every estate gets it (less whatever lifetime gifts in the last seven years already consumed). The residence nil-rate band of £175,000 is conditional three times over, and the exam tests each condition as its own question: (1) a qualifying home must pass to DIRECT DESCENDANTS — children, grandchildren, their spouses — never a sibling, nephew or friend, however close; (2) it is capped at the value of the home itself — a £120,000 flat supports £120,000 of RNRB, not the full band; (3) it tapers away at £1 for every £2 by which the estate exceeds £2,000,000, so very large estates lose it regardless of who inherits. Anticipate the blur before it forms: 'the estate has a house in it' is NOT the test — who receives it and how big the estate is both matter, and a wrong answer usually grants the RNRB on the strength of the house alone. Both bands transfer between spouses and civil partners, and the mechanics carry two precision points: what transfers is the unused PERCENTAGE, not the cash amount (a spouse who died when the band was lower still passes on '100%', applied to today's figure), and the transfer arrives only on a CLAIM by the second estate's personal representatives — never automatically. Everything above the surviving bands is taxed at 40%.