You do not usually owe any tax on an inheritance at the time you inherit it.
The personal representative (an executor or administrator) for the estate usually pays any Inheritance Tax due before giving you the inheritance.
HM Revenue and Customs (HMRC) will contact you if you have to pay any Inheritance Tax yourself. This may happen if:
- the person who died gave you a gift in the 7 years before they died
- your inheritance is put into a trust and the trust does not or cannot pay
- the personal representative could not or did not pay before you got your inheritance
After you inherit you may have to pay:
- Income Tax on any profit you earn from an inheritance (for example, dividends on shares or rental income from a property)
- Capital Gains Tax when you sell anything you inherited
Money and shares
You do not usually have to pay Income Tax or Capital Gains Tax immediately if you inherit money or shares.
HM Revenue and Customs (HMRC) will contact you if you owe any Inheritance Tax.
You may have to pay Income Tax on:
- interest you earn from money after you inherit it
- dividends paid on shares after you inherit them
If you have an ‘R185 (estate income)’ form
The personal representative (an executor or administrator of the estate) may give you an R185 (estate income form) when you inherit.
This gives details of any Income Tax that was paid on your inheritance between the date the person died and the date the inheritance was passed on to you.
You will need this form if you complete a Self Assessment tax return or to claim a tax repayment from HMRC.
Capital Gains Tax
You’ll have to pay Capital Gains Tax if you sell shares you inherited that went up in value since the person died.