Income tax on inheritance

Bookworm225

etienneg said:

Thanks for the reply. The initial thought was about bank accounts, jewellery, car, a house, etc., which I think are all classed as cash?

As regards a pension pot, you say 'income from it is taxed at your own rate'. Does this mean such income is just added to the recipient's other income and tax is paid on the result (which means some may be at the recipient's marginal rate and the rest at a higher rate)?

can you explain why you think income tax is suddenly charged on an inheritance that has already been assessed for/subject to inheritance tax?

once the estate has been distributed to the beneficiaries of the estate then all such items become the personal property of the people who inherited them and obviously therefore will be added to the net worth of said people

if that means said people now have assets generating more income then they will pay more income tax on it eg: increased balance in a (non ISA) savings account.
If it is another car in the driveway. or cash under the mattress. then no they will not pay income tax on it, just the same as they would not pay income tax on their own car to start with.

Linton

Bookworm225 said:

etienneg said:

Thanks for the reply. The initial thought was about bank accounts, jewellery, car, a house, etc., which I think are all classed as cash?

As regards a pension pot, you say 'income from it is taxed at your own rate'. Does this mean such income is just added to the recipient's other income and tax is paid on the result (which means some may be at the recipient's marginal rate and the rest at a higher rate)?

can you explain why you think income tax is suddenly charged on an inheritance that has already been assessed for/subject to inheritance tax?

once the estate has been distributed to the beneficiaries of the estate then all such items become the personal property of the people who inherited them and obviously therefore will be added to the net worth of said people

if that means said people now have assets generating more income then they will pay more income tax on it eg: increased balance in a (non ISA) savings account.
If it is another car in the driveway. or cash under the mattress. then no they will not pay income tax on it, just the same as they would not pay income tax on their own car to start with.

It is the same as if the deceased had taken cash from the pension before they died.  They would have been charged income tax on the pension payment and would be liable for extra IHT on the increase in cash.  It seems reasonable to me as they would have not paid income tax when the money was paid into the pension.