{"id":9378,"date":"2021-01-13T17:48:20","date_gmt":"2021-01-13T17:48:20","guid":{"rendered":"https:\/\/taxfix.com\/en-uk\/?p=9378"},"modified":"2024-04-02T16:40:36","modified_gmt":"2024-04-02T15:40:36","slug":"do-you-pay-tax-on-inherited-money-in-the-uk","status":"publish","type":"post","link":"https:\/\/taxfix.com\/en-uk\/the-tax-basics\/do-you-pay-tax-on-inherited-money-in-the-uk\/","title":{"rendered":"Do you pay tax on inherited money in the UK?"},"content":{"rendered":"\n<p>If you\u2019ve recently inherited some money, you may be wondering: <em>do you pay tax on inherited money in the UK?<\/em>&nbsp;<\/p>\n\n\n\n<p>If the person who died left you money or shares, in most cases you won\u2019t have to pay any tax on this. However, if they\u2019ve put you in their will, you might still have to deal with what\u2019s known as <a href=\"https:\/\/www.gov.uk\/inheritance-tax\" target=\"_blank\" rel=\"noreferrer noopener\">Inheritance Tax<\/a>.&nbsp;<\/p>\n\n\n\n<p>We\u2019ve put together a round-up of everything you need to know about paying tax on inherited money in the UK below.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Do you pay tax on inherited money in the UK?<\/h2>\n\n\n\n<p>This depends entirely on the amount of money or possessions that were left to you. There are various ways in which a person can inherit money in the UK. You don\u2019t usually have to pay any tax immediately, but you eventually might need to pay one of the following:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Inheritance Tax<\/li>\n\n\n\n<li>Income Tax&nbsp;<\/li>\n\n\n\n<li>Capital Gains Tax<\/li>\n<\/ul>\n\n\n\n<p>Let\u2019s break each of these down:<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Inheritance Tax<\/h2>\n\n\n\n<p>Inheritance Tax is a tax on someone\u2019s <a href=\"https:\/\/taxfix.com\/en-uk\/glossary\/inheritance-tax-iht-allowance\/\" target=\"_blank\" rel=\"noreferrer noopener\">estate<\/a> after they\u2019ve died. In other words, when a person dies, HMRC can impose a tax on their property, money or possessions. There\u2019s normally nothing to pay if:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The value of the person\u2019s estate is below the annual threshold (\u00a3325,000 in the 2024\/25 tax year)<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>You\u2019re the deceased\u2019s spouse or civil partner and they left you everything<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The deceased leaves everything above the threshold to a charity, a community amateur sports club, a political party or a museum<\/li>\n<\/ul>\n\n\n\n<p>Be aware that if the estate\u2019s value is below the threshold, you\u2019ll still need to <a href=\"https:\/\/www.gov.uk\/valuing-estate-of-someone-who-died\/tell-hmrc-estate-value\" target=\"_blank\" rel=\"noreferrer noopener\">report it to HMRC<\/a>.<\/p>\n\n\n<\/div> <!-- .c-body -->\n\n<div class=\"b-highlight-mini m-blue m-align-left\">\n    <div class=\"b-block-body\">\n        <h2>How much is UK Inheritance Tax?<\/h2>\n<p>In the 2024\/25 tax year, the standard Inheritance Tax rate is 40%, payable for most estates that are larger than \u00a3325,000. Here\u2019s an example of how it works:<\/p>\n<p>Your auntie names you in her will as her sole heir. The total value of her estate is \u00a3500,000.<\/p>\n<p>The first \u00a3325,000 you recieve would be tax-free. You\u2019d pay inheritance tax at the rate of 40% on the remaining \u00a3175,000.<\/p>\n<p>As a result, you\u2019d owe HMRC \u00a370,000.<\/p>\n\n    <\/div>\n<\/div> <!-- .b-highlight-mini -->\n\n<div class=\"c-body\">\n\n\n\n\n<h2 class=\"wp-block-heading\">When does it need to be paid by?<\/h2>\n\n\n\n<p>You must pay Inheritance Tax within six months of your loved one\u2019s death, otherwise HMRC will begin charging you interest. Usually, the tax will already be taken out of the inheritance when you receive it; the deceased will have appointed someone (an executor) to take care of this.<\/p>\n\n\n\n<p>If the deceased had no will and you\u2019re deemed the legal heir, you\u2019ll have to designate someone to administer the estate.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Other taxes you might need to pay<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\">Income Tax<\/h3>\n\n\n\n<p>You may have to pay Income Tax on profit you later earn from your inheritance. This can be dividends from shares (check out our Dividend tax calculator <a href=\"https:\/\/taxfix.com\/en-uk\/calculator\/dividend-tax\/\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>), rental income from a property etc.&nbsp;&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Capital Gains Tax<\/h3>\n\n\n\n<p>Capital Gains Tax relates to any shares or valuable assets (like property\/art) you have inherited from your loved one. You will have to pay this tax if you sell any inherited assets that have gone up in value since the person died. You can read more on how much tax you may be charged <a href=\"https:\/\/taxfix.com\/en-uk\/capital-gains-tax-rates\/\" target=\"_blank\" rel=\"noreferrer noopener\">here<\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<div class=\"embed-container\"><iframe loading=\"lazy\" title=\"Tax in 10(ish) seconds - what is Capital Gains Tax?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/ZUdtnBFew8o?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n<\/div><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">Are there any exemptions?<\/h2>\n\n\n\n<p>One exemption to inherited money is what\u2019s known as \u2018exempted gifts\u2019. You don\u2019t have to pay Inheritance Tax on small gifts you make out of your normal income e.g. Christmas or birthday presents.&nbsp;<\/p>\n\n\n\n<p>You&#8217;re also not charged on gifts between spouses or civil partners. You can give them as much as you like during your lifetime, as long as they live in the UK permanently.&nbsp;<\/p>\n\n\n\n<p>All other gifts count towards the value of your estate. Anyone else you gift money to will be charged Inheritance Tax if you give away more than \u00a3325,000 in the 7 years before your death.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you\u2019ve recently inherited some money, you may be wondering: do you pay tax on inherited money in the UK?&nbsp; If the person who died left you money or shares, in most cases you won\u2019t have to pay any tax on this. However, if they\u2019ve put you in their will, you might still have to [&hellip;]<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[430,427],"tags":[70,423,348,421],"class_list":["post-9378","post","type-post","status-publish","format-standard","hentry","category-gifts-winnings-and-inheritance","category-the-tax-basics","tag-capital-gains-tax","tag-gifts-inheritance","tag-income-tax","tag-property"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.8 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Do you pay tax on inherited money in the UK? &#8211; Taxfix<\/title>\n<meta name=\"description\" content=\"Have you recently inherited money from the death of a loved one and want to know whether this is taxed? 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