You do not pay inheritance tax on what you receive

The estate pays it before anything is distributed. A beneficiary receiving £50,000 has no inheritance tax to pay and nothing to report on their return for the receipt itself.

Inherited assets get a new base cost

Assets are rebased to their value at the date of death, so the gain accrued during the deceased's lifetime is wiped out for capital gains tax. Selling soon after therefore usually produces little or no gain.

Income from what you inherit is taxable

Interest, dividends and rent from inherited assets are yours and taxable from the date you receive them. A large inheritance can quietly push you into a higher band.

A deed of variation can redirect it

Within two years of the death, a beneficiary can redirect their inheritance and have it treated as if the deceased had left it that way — useful where the money would be better with the next generation.

Do I pay tax on money I inherit?

Inheritance tax is paid by the estate, not by you — but what you inherit carries a new base cost, and what you do with it has consequences of its own.

What changes for you

You do not pay inheritance tax on what you receive
The estate pays it before anything is distributed. A beneficiary receiving £50,000 has no inheritance tax to pay and nothing to report on their return for the receipt itself.
Inherited assets get a new base cost
Assets are rebased to their value at the date of death, so the gain accrued during the deceased's lifetime is wiped out for capital gains tax. Selling soon after therefore usually produces little or no gain.
Income from what you inherit is taxable
Interest, dividends and rent from inherited assets are yours and taxable from the date you receive them. A large inheritance can quietly push you into a higher band.
A deed of variation can redirect it
Within two years of the death, a beneficiary can redirect their inheritance and have it treated as if the deceased had left it that way — useful where the money would be better with the next generation.

The decisions this opens up

Each works on your own figures and shows every option with the workings. Free, and no sign-up.

Should I make a pension contribution?You have spare cash. This compares putting it in a pension, an ISA, or leaving it in savings — projected forward and taxed correctly at both ends.What can I still do before the tax year ends?Every allowance that resets on 6 April, what each one is worth to you, and how long is left to use it. Use-it-or-lose-it items first.Should I sell this before or after 5 April?The capital gains exempt amount resets every 6 April and never carries forward. Splitting a disposal across two tax years can use two of them.

Dates this puts in your diary

2 years from the deathMake a deed of variation, if the inheritance should go elsewhere
31 JanuaryReport income arising from inherited assets

Run the numbers

Inheritance Tax Calculator Capital Gains Tax Calculator

Software that files it for you

Partner links

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