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You do not usually owe any tax on an inheritance at the time you inherit it.

Inheritance Tax

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

Other taxes

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

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.

Income 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 鈥楻185 (estate income)鈥� 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鈥檒l have to pay Capital Gains Tax if you sell shares you inherited that went up in value since the person died.

You do not pay Stamp Duty, Income Tax or Capital Gains Tax immediately if you inherit a property.

HM Revenue and Customs (HMRC) will contact you if you owe any Inheritance Tax.

Selling the property

You do not pay Capital Gains Tax when you sell your home. You will pay it if you make a profit when you sell a property that is not your main home.

If inheriting a property means you own 2 properties, you must tell HMRC which property is your main home within 2 years.

If you do not tell HMRC which of your properties is your main home, HMRC will decide if a property was your main home when you sell it.

Renting out the property

You may have to pay tax on the rental income.

Properties held in trust

Usually if you inherit property held in a trust, you are the 鈥榖eneficiary鈥� and the trustees are the legal owners and responsible for paying tax on income the trust receives.

You may still have to pay tax on any income you receive from the trust.

Bare trusts

If the trust is a 鈥榖are trust鈥� you are both the beneficiary and the legal owner and are responsible for paying tax on income the trust receives.

You do not usually have to pay any Stamp Duty or tax when you inherit property, shares or the money in joint bank accounts you owned with the deceased.

Inheritance Tax

What you pay will depend on how you owned the shares or property or how your bank accounts were set up.

If you and the deceased jointly owned the assets, you鈥檒l be known as 鈥榡oint tenants鈥� (鈥榡oint owners鈥� in Scotland).

If you each owned a part of the assets, you鈥檒l be known as 鈥榯enants in common鈥� (鈥榗ommon owners鈥� in Scotland and 鈥榗oparceners鈥� in Northern Ireland). Each part could be half or an agreed percentage of the money, shares or property.

Check with your bank if you鈥檙e not sure how the money in your accounts was divided up.

Joint tenants

You automatically inherit anything you owned as 鈥榡oint tenants鈥�.

You may have to pay Inheritance Tax if the whole of the deceased鈥檚 estate (all their money, property and possessions) is worth more than the Inheritance Tax threshold of 拢325,000 and the deceased鈥檚 estate does not pay.

Tenants in common

You may have to pay Inheritance Tax on the deceased鈥檚 share of the money in bank accounts, shares or property if the whole of their estate (money, property and possessions) is worth more than the Inheritance Tax threshold of 拢325,000.

If the deceased left you their share of the money, shares or property in their will, the executor of the will or administrator of their estate should pay the Inheritance Tax out of the estate.

If the estate does not have enough money to pay the Inheritance Tax on the deceased鈥檚 share of the assets, or the executor does not pay, you鈥檒l have to pay it. You may have to sell the shares or property to pay the tax and any other debts.

HM Revenue and Customs (HMRC) will contact you if you need to pay.

Income Tax and Capital Gains Tax

You may have to pay other taxes on anything you earn or profits you make from:

• bank interest
• share dividends
• property