Do beneficiaries pay tax on inheritance in the UK?

Beneficiaries do not normally pay Inheritance Tax personally. The estate settles IHT before assets are distributed. You may, however, owe Income Tax, Dividend Tax or CGT on what the inherited assets generate or sell for afterwards.

Do I pay tax on inherited cash?

No tax is due when you receive inherited cash. Once it sits in your name, any interest is taxable as savings income, subject to your Personal Savings Allowance and tax band.

Do I pay tax on inherited property in the UK?

There is no tax simply on inheriting a property. Capital Gains Tax may apply on any rise in value between the date of death and the date you sell, and rental income is taxable.

Do I pay tax on inherited shares or ISAs?

Inherited shares are received at probate value — no immediate tax. Future dividends and gains are taxable. ISA tax-free status is preserved between spouses through the Additional Permitted Subscription, but otherwise ends.

Do I pay tax on a foreign inheritance in the UK?

Foreign inheritances are generally not subject to UK IHT if the deceased was non-UK domiciled. Income or gains generated afterwards are taxable for UK residents under normal rules.

Do You Pay Tax On Inheritance UK? | Beneficiary Tax Explained

Reviewed for accuracy and UK relevance by the Inheritance Money Advice editorial team· Last reviewed May 2026

Quick answer

What taxes apply after you receive an inheritance in the UK?

1
No personal Inheritance Tax — the estate has already paid this where due.
2
Income Tax on interest from inherited cash above your Personal Savings Allowance.
3
Dividend Tax on inherited shares above the £500 dividend allowance.
4
Capital Gains Tax on rises in value between probate value and sale.
5
Income Tax on rental income from inherited property at your marginal rate.

Inheritance Tax — paid by the estate

UK Inheritance Tax is paid by the deceased's estate before assets are distributed. As a beneficiary, the money you receive has typically already had any IHT deducted. Read more in our allowance guide.

Tax on inherited cash

Receiving the cash itself triggers no tax. Once it sits in a savings account, interest counts as your savings income — taxable above the Personal Savings Allowance (£1,000 basic-rate, £500 higher-rate, £0 additional-rate).

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Tax on inherited property

No tax applies on inheriting a UK property. If you sell later, Capital Gains Tax may apply on any increase from the probate valuation. If you let it out, rental profits are taxed as income.

Tax on inherited shares and funds

You receive shares at probate value with no immediate tax. Dividends are taxable above the £500 allowance, and gains on sale are subject to CGT above the £3,000 annual exempt amount (2024/25).

Inherited ISAs

If you inherit an ISA from a spouse, you receive an Additional Permitted Subscription equal to the value — preserving tax-free status. From other relatives, the ISA wrapper ends and the assets transfer at probate value.

Inherited pensions

Most defined contribution pensions pass IHT-free outside the estate. Income Tax may apply on withdrawals if the holder died after age 75. Pension IHT rules change from April 2027 — review nominations regularly.

Educational · UK-focused

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Where to read next

For the bigger picture, see our Inheritance Tax overview, the guide on reducing IHT legally, and our complete guide on what to do with an inheritance.

Published January 2025 · Last reviewed May 2026

Do You Pay Tax On Inheritance In The UK?