Do I Have to Inform HMRC If I Inherit Money in the UK?

Understanding Inheritance Tax in the UK

Inheritance tax (IHT) is a tax levied on the estate of a deceased individual. It is calculated based on the value of the estate, including assets such as property, savings, and investments. The current IHT threshold in the UK is £325,000, meaning that estates valued below this amount are exempt from IHT.

Do I Need to Inform HMRC About Inherited Money?

Yes, you are required to notify HMRC (Her Majesty’s Revenue and Customs) if you inherit money or assets, even if the inheritance falls below the IHT threshold. This notification should be made within six months of the date of death of the deceased individual.

How to Notify HMRC

You can notify HMRC about your inheritance by completing an Inheritance Tax Account (IHTA) form. This form can be obtained from the HMRC website or by contacting HMRC directly. The IHTA form requires you to provide details about the deceased individual, the value of the inheritance, and any IHT that is due.

Paying Inheritance Tax

If the value of the inherited estate exceeds the IHT threshold, you will be responsible for paying IHT on the excess amount. The IHT rate is 40%, and it is typically deducted from the estate before it is distributed to the beneficiaries. The executor of the estate is usually responsible for handling the payment of IHT.

Penalties for Late Notification

Failure to notify HMRC about an inheritance within six months of the date of death can result in penalties. These penalties can be significant, so it is important to notify HMRC promptly.

Additional Considerations

  • If you inherit money from a non-UK resident, you may still be liable to pay IHT if the assets are located in the UK.
  • You may be able to reduce your IHT liability by utilizing certain exemptions and reliefs, such as the spousal exemption and the charitable exemption.
  • It is advisable to seek professional advice from a tax advisor or solicitor if you have any complex inheritance tax issues.

In the UK, you are required to inform HMRC if you inherit money or assets, regardless of the value of the inheritance. Failure to do so can result in penalties. By understanding your IHT obligations and notifying HMRC promptly, you can ensure that you comply with the law and avoid any potential issues.

Do I need to complete an Inheritance Tax return (IHT400)?


Do I have to declare inheritance money as income UK?

Your inheritance is not classed as income and is not taxable. Any interest or dividends arising from your inheritance would be taxable and would need to be declared.

Do I need to declare inheritance on my tax return?

If you received a gift or inheritance, do not include it in your income. However, if the gift or inheritance later produces income, you will need to pay tax on that income.

Do I have to pay UK tax on inheritance from USA?

Individuals who are determined to have acquired domicile in the United Kingdom will generally face exposure to inheritance tax on their worldwide assets, if valued in excess of relevant thresholds. Alternatively, non- domiciled individuals pay inheritance tax only on assets situated in the United Kingdom.

How much can you inherit from your parents without paying taxes UK?

There’s normally no Inheritance Tax to pay if either: the value of your estate is below the £325,000 threshold. you leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club.

Do I need to inform HMRC about my inheritance?

While you may not need to inform HMRC directly about the inheritance, it is essential to understand and fulfil your tax obligations by reporting taxable income or inheritance tax liabilities through appropriate channels.

What happens if you inherit money in the UK?

In the UK, if you inherit money, it is usually the responsibility of the executor or administrator of the deceased’s estate to settle any Inheritance Tax (IHT) due with HM Revenue & Customs (HMRC) before distributing the assets to the beneficiaries.

Does HMRC investigate and review inheritance tax matters?

Yes, HMRC has the authority to investigate and review inheritance tax matters. When an individual passes away, the executors or administrators of the estate are responsible for assessing and paying any inheritance tax due. HMRC may conduct checks and audits to ensure compliance with inheritance tax regulations.

How do I report the value of my estate to HMRC?

Find out how to work out and report the value of the estate to HMRC. To get the value of the estate on which Inheritance Tax is due use these steps: Work out the market value of all the assets in the estate. Add these up to get the ‘gross value’ of the estate. Take off any debts (for example, a mortgage).

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