It's the summer of 1986 and Nick is leading the sort of life he has always dreamed of.
Safely installed as a member of the Fedden household, Nick is also a player on the London gay scene. The only thing he's unhappy about is his gorgeous boyfriend Wani's insistence on keeping their affair secret to protect his family's name. So long as his lifestyle is kept quite, Wani's quite happy to indulge to the full - persuading Nick to take part in a threesome after an afternoon at Hampstead ponds, for instance.
Meanwhile, Gerald arranges a piano recital for his ghastly Tory pals. Both Wani's fiancée and his father attend the event, and Nick feels the pressure of his secret love affair more than ever.
Some time later, Nick returns to his home town of Barwick, where Gerald is opening a fête. During the trip, Nick accidentally walks in on Gerald being unfaithful to his wife with his secretary, Penny. Gerald meets Nick's eye and Nick flees.
In the summer, Wani and Nick join the Feddens on holiday in France. Also holidaying is Catherine's boyfriend Jasper, who's been bonding with Gerald. And despite Toby having been dumped by his fiancée Sophie Tipper, Gerald has still invited her influential parents.
Relations with the Tippers are strained, and made worse at supper. After a phone call, Rachel delivers the news that Catherine's godfather has died. The family skirt over the cause at first, but Catherine is desperate that the truth be told and that they accept that he died of AIDS. In the ensuing conversation, the Tippers are disgusted to learn of Nick's sexuality.
Later, Catherine discovers the truth about Nick and Wani's relationship thanks to a carelessly discarded condom in the pool house. Faced with her questions, Nick admits all.
Back in London, Gerald and Rachel's silver wedding party has a very special guest of honour - Mrs Thatcher. Nick begins the party in a subdued mood, having spotted Leo in a pub just before. Leo looked seriously ill, and Nick realises that the love of his life is dying from AIDS.
Things don't improve when Nick discovers Wani and Jasper having sex. Nick is shattered to realise that Wani doesn't seem that concerned about their affair. To pick himself up, he takes some cocaine. Then, buoyed up by the drug, and watched by the amazed guests, he leads Mrs Thatcher to the dance floor.