# Residence nil-rate band and the £2 million taper: the inheritance tax a £2.2 million estate pays, worked

> The £175,000 residence nil-rate band shrinks by £1 for every £2 an estate is over £2 million. Worked at £2.2 million and £2.35 million, with the 60% slice.

- Page to cite: https://aeolookup.com/solicitors/residence-nil-rate-band-taper-2-million-estate-worked-examples/
- Publisher: AEO Lookup (https://aeolookup.com/)
- Section: Solicitors, Probate and private client
- Published 6 October 2026
- Key fact: For a single person leaving a home to children, the £175,000 residence nil-rate band starts to taper at £2,000,000 and is gone at £2,350,000. An estate of £2,200,000 loses £100,000 of band and pays £720,000 against £680,000 without the taper, so the extra £200,000 of estate costs £40,000 extra, an effective 60% rate on that slice.
- Sources: GOV.UK, Inheritance Tax nil-rate band and residence nil-rate band thresholds from 6 April 2026 to 5 April 2028 (policy paper: £325,000, £175,000, taper of £1 for every £2 over £2 million of net estate); GOV.UK, Inheritance Tax (40% standard rate, £500,000 combined threshold for a home passed to children or grandchildren); GOV.UK, Residence nil-rate band guidance (direct descendants, transfer between spouses). All read 6 October 2026.

A client's estate is worth a little over £2 million, and the house is going to the children. The family expects a £500,000 tax-free band. The estate is over the taper threshold, so it gets less, and the arithmetic is worth doing before the Inheritance Tax account is built.

## The figures

GOV.UK's policy paper on the thresholds gives, for deaths from 6 April 2026 to 5 April 2028, a nil-rate band of £325,000 and a residence nil-rate band of £175,000. The residence band reduces "by £1 for every £2 that the net value of the estate is more than £2 million". The standard rate of tax is 40%, charged on the part of the estate above the threshold. GOV.UK says the threshold can reach £500,000 when a home passes to children or grandchildren.

The residence band applies only when a home goes to direct descendants: children, grandchildren, and their spouses or civil partners, including step and adopted children. The unused share of a late spouse's band can be added, and is worked out as a percentage.

## Where the taper bites

For a single person, the band is cut by half the excess over £2,000,000, so it reaches zero when the estate is £2,000,000 plus twice £175,000, which is £2,350,000.

| Net estate | Taper reduction | Residence band left | Tax-free total | Tax at 40% |
|---|---|---|---|---|
| £1,900,000 | £0 | £175,000 | £500,000 | £560,000 |
| £2,000,000 | £0 | £175,000 | £500,000 | £600,000 |
| £2,200,000 | £100,000 | £75,000 | £400,000 | £720,000 |
| £2,350,000 | £175,000 | £0 | £325,000 | £810,000 |
| £2,500,000 | £175,000 | £0 | £325,000 | £870,000 |

Between £2,000,000 and £2,350,000, each extra £2 of estate adds £2 of taxable value and also removes £1 of band, which adds another £1 of taxable value. That is £3 taxed at 40%, or £1.20 of tax on every extra £2, an effective 60% rate. Check it against the table: from £2,000,000 to £2,200,000 the tax rises from £600,000 to £720,000, which is £120,000 on £200,000 of extra estate.

Without a taper, £2,200,000 would pay £680,000, so the taper adds £40,000.

## Couples

A surviving spouse can carry forward the unused percentage of the first death's band, which doubles the amounts. With a full transfer the bands are £650,000 and £350,000, and the taper starts at the survivor's own £2,000,000 estate. The residence band is then gone at £2,700,000. This guide has not worked the transfer percentages, so confirm the first death's unused share from the earlier estate papers.

## Practical points for the file

1. Value the whole estate at the date of death, not only the home. GOV.UK says the taper looks at the net value of the estate.
2. Check the home really goes to direct descendants under the will or the intestacy rules.
3. Ask about gifts and trusts, which can change the net value that counts.
4. Use the correct death date. The figures above apply to deaths on or after 6 April 2026 and are frozen to 5 April 2028 on that paper.
5. Record the working in the estate file so a supervising solicitor can check it.

For the filing dates once the figure is known, see our [probate timeline calculator](https://aeolookup.com/solicitors/probate-timeline-calculator-key-dates/). For smaller estates where nothing is payable, our guide on [whether you need probate at all](https://aeolookup.com/solicitors/do-you-need-probate-small-estate-5000-fee-line-savings-joint-property/) is the other end of the scale, and the [estate accounts template](https://aeolookup.com/solicitors/estate-accounts-template-capital-income-distribution-worked-example/) shows where the tax lands in the accounts.

Overlyft ![](https://aeolookup.com/img/d/ours-badge.png) can set up an AI assistant that pulls the asset list from your file, runs the taper working for the fee earner and puts it in front of the supervising solicitor to check. It does not decide the tax.

This is general information for England and Wales, not legal or tax advice. A supervising solicitor should check the working before it is used.

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General information for UK small firms, not legal, tax or financial advice.