Tax on inherited money

jemball

Do I have to pay unearned income tax on money left to me by a relative?

CLAPTON

No...if your relative left more than the IH tax allowance then their estate pays IH tax but you have no liability.

dzug

There is no tax on inherited money in the UK - well none payable by the recipient that is. Any inheritance tax will have been paid by the estate before you get it.

PasturesNew

Once you have the money in a savings account, you will be paying tax on the interest you earn on it though. Mostly, this would be taken directly from source so you wouldn't need to do anything about declaring it. Just keep the statements they send you showing Gross Tax, Tax Paid in case. But that's low level likely to ever be asked for.

Murdina

just occurs to me that maybe you have in mind tax on any income arising on the bequest before it finally gets into your hands (i.e interest on it etc). If you do a self assessment return then this has to be shown on the supplementary page Trusts etc (with a brown tax) under the section income from the estates of deceased persons. The solicitor should give you a form showing if any such income arose. If you are not within SA but are a higher rate taxpayer (or will be if you add on this income) you need to tell HMRC about it.

Alfie_E

When your relative died, a certain amount of money and/or assets became due to you. It’s treated as a gift taking place on the date of death. Just as with a gift, you’re not liable for tax. The estate – all the money and property left by the deceased – could attract inheritance tax. That needs to be sorted out and paid by the person or people administering the estate.

There can be some time between the date of death and when the estate is distributed. In that time, the estate may have generated some income. That income is treated as having been made by the residuary beneficiaries. After all costs, and all the gifts of specific assets and amounts of money, called devices and legacies, you’re left with what’s called the residue. People who get all or a share of that are called the residuary beneficiaries. If you’re a residuary beneficiary, you may well receive an R185. Any income will have already been taxed at the basic rate, so it’s only important if you’re not a basic rate tax payer. If you’re a higher-rate taxpayer, the figures can be used to fill in any tax return. If you’re a non-taxpayer, you could reclaim the tax already paid on your behalf.

jemball

I am extrememly grateful for all the very helpful replies, advice and information, and I really appreciate the time and trouble you have all taken.

Regards, jemball