Do I Have to Inform HMRC If I Inherit Money?
No. As a beneficiary, you do not need to contact HMRC simply because you have received an inheritance. Any Inheritance Tax due on the estate is paid by the executor or personal representative before the assets reach you.
HMRC will only contact you directly in limited circumstances: if the deceased gave you a gift within seven years before death that is now taxable, if your inheritance sits in a trust that cannot pay its own IHT liability, or if the personal representative distributed the estate without paying the tax owed. In each of these cases, HMRC can pursue you personally for the outstanding amount.
Where you may need to report to HMRC is in what you do with the inheritance afterwards. If you inherit a property and rent it out, the rental income is taxable and must be declared through Self Assessment. If you sell an inherited asset for more than its probate value, Capital Gains Tax may apply on the gain. And if you invest the inheritance outside of an ISA or pension wrapper, any interest, dividends, or gains above your annual allowances will need to be reported.
Beyond tax, an inheritance can affect means-tested benefits. Receiving a lump sum may reduce or remove your entitlement to Universal Credit, Pension Credit, or Housing Benefit, depending on the amount. You should report the change to the relevant benefit authority promptly.
For more detail on how HMRC reviews estates after death, see our guide on how HMRC investigates inheritance tax. Understanding the six-month rule for probate can also help you understand the timeline involved.
HMRC will only contact you directly in limited circumstances: if the deceased gave you a gift within seven years before death that is now taxable, if your inheritance sits in a trust that cannot pay its own IHT liability, or if the personal representative distributed the estate without paying the tax owed. In each of these cases, HMRC can pursue you personally for the outstanding amount.
Where you may need to report to HMRC is in what you do with the inheritance afterwards. If you inherit a property and rent it out, the rental income is taxable and must be declared through Self Assessment. If you sell an inherited asset for more than its probate value, Capital Gains Tax may apply on the gain. And if you invest the inheritance outside of an ISA or pension wrapper, any interest, dividends, or gains above your annual allowances will need to be reported.
Beyond tax, an inheritance can affect means-tested benefits. Receiving a lump sum may reduce or remove your entitlement to Universal Credit, Pension Credit, or Housing Benefit, depending on the amount. You should report the change to the relevant benefit authority promptly.
For more detail on how HMRC reviews estates after death, see our guide on how HMRC investigates inheritance tax. Understanding the six-month rule for probate can also help you understand the timeline involved.