Legacy paid, possible tax due

[bluebellation]

A week ago I finally got my share of my stepmother's estate. The solicitors were the executors and it had dragged on for over a year as they said DWP hadn't finished checking all was OK at their end.
Solicitors now say HMRC say there is tax due and we will have to pay this .
Surely this is negligence on the side of the solicitor? They shouldn't have released the funds if there were still matters outstanding?
My money is now committed elsewhere.
Any advice gratefully received.

Is this tax on a gift previously given to you by the deceased?

Any tax due should have been deducted from the estate by the solicitors before it was distributed to the beneficiaries. Negligence on their part, maybe?

You received it a week ago and it is already all committed elsewhere?

I don’t understand what has happened (unless you received a gift from her in the 7 years before death in which case I can see why you may have tax to pay). But normally inheritance tax has to be paid first before distribution. Unless it is a smaller adjustment - eg because iht was paid based on assumed selling price of a property and it sold for more.

fwiw I don’t think ‘the money is committed elsewhere’ will fly with HMRC. Do you know how much tax is due?

I'm guessing the OP was aware it was coming and roughly how much, has been waiting a long time for it to arrive, and that's why it is already committed.

You need to ask the executor(who may or may not be the solicitor) what this tax relates to. Did DWP take some for care costs? Were there gifts made within last seven years for which you may be liable for CGT? If the distribution was recent the IHT should have been settled first, if any was paid out in advance in part it may not,

Regardless of negligence, the rule is that the executors are personally liable if they distribute the estate without paying all the debts. They can ask the beneficiaries to pay back the money needed to cover the debt, but they can't force them to pay.

"Surely this is negligence on the side of the solicitor? They shouldn't have released the funds if there were still matters outstanding?"

Yes, you are entirely correct.

"The solicitors were the executors"

This is the important part of your post.

If the executor distributes the estate before fully settling the IHT liability with HMRC then they assume joint and several personal liability for the remaining balance.

Once assets leave the estate, HMRC's primary legal recourse is against the proving executor, not the beneficiary. HMRC can go so far as to pursue the executor’s personal assets, bank accounts, or force the sale of their home to satisfy the debt. If the executor is a firm of solicitors then they will seek to enforce against the assets of the firm.

There was a case in 2018 that illustrated this, Harris v Revenue and Customs (Inheritance Tax: Other) [2018] UKFTT 204 (TC)

(otherwise Glyne T Harris as personal representative of Helena Norma McDonald (deceased) v HMRC [2018] TC06448 )

https://www.bailii.org/uk/cases/UKFTT/TC/2018/TC06448.html

In that case, Mr Harris was the executor for Helena McDonald's estate. He distributed a substantial amount (possibly all) of the estate to the beneficiary.

The beneficiary said "Trust me, bro, I'll pay any IHT due". The beneficiary then decamped to Barbados and refused to pay the IHT. The executor was held to be personally responsible for paying all of the IHT due, which was about £340,000.

The executor in that case was just an ordinary person who didn't take legal advice and was held to be liable. That a firm of solicitors has distributed the estate before ensuring that any IHT due has been paid really does not look good for them at all.

I would strongly suggest that you search for "Contentious probate solicitor [name of your town]". Then speak to them about what has happened and that the executors are coming after you personally.

You really do need legal advice that is specific to your particular circumstances.

It depends on the type of tax.Most people on the thread are assuming inheritance tax. However if funds have been held on the solicitor's client account pending distribution and have earned interest then income tax will generally be due on that interest. If the beneficiaries have been pushing the executors to distribute then they may have paid the interest out gross without paying the tax on it first. In this case the beneficiaries would be liable to the tax on the gross interest received.
I have seen this in practice quite a bit where beneficiaries don't want to wait for settlement of the estate's tax affairs and HMRC clearance to be issuex ( currently taking anywhere between 6 and 12 months) and are chasing the executors to distribute.
Do you know what tax is due and why OP?

Thanks for all your replies. This is not inheritance tax just the process of a house sale and a small amount of savings. The solicitor hasn't yet told us what is due, just advised that there will be something to pay back.
It is perhaps, tax on interest - the house sold in February, so the money will have been sitting in the account since then.

"and have earned interest then income tax will generally be due on that interest."

That's a very fair point. But, in that situation, that would involve paying income tax on any interest received over the course of "over a year".

I believe that solicitors are typically paying around 1% to 1.5% annual interest at the moment (or maybe 2% for amounts above £1 million).

So, if the OP had received £1 million from the estate then they may have also received around £10k -£15k in interest as well. From that, assuming that she was a higher rate tax payer, then she would be looking at an income tax bill of £4k - £6k.

For a person receiving £1,015,000, I would suggest is not going to be worried about paying £6,000 in income tax. (Although, if that is the situation, then I do totally apologise and agree that the OP is definitely being unreasonable).

From what the OP has said, it does seem more likely that this is connected with a much larger IHT payment. But, if it isn't, then, yes, I agree with you.

"It is perhaps, tax on interest - the house sold in February, so the money will have been sitting in the account since then."

In that case, yes, you have to pay that.

There may have been CGT due on the house sale as value could have gone up from date of death to date of sale but this tax is supposed to be paid within 2 months if the sale. (We are going through this just now and the taxe has been paid by the estate following the sale 2 months ago.)
The money in the estate will have had interest earned as it's a very large amount but there will be a tax return done on the estate which will calculate the tax that needs to be paid but all of this is being done before distribution of the estate. So yes you will have tax to pay but should have been told about before distribution.
My FIL died in August 2025. Probate granted Feb 26. The sale proceeds of 3 of the properties have been distributed but that's because 3 of the 4 properties were left to one person but all of the taxes due to CGT have been paid. The tax on the estate is still to be calculated but nothing is being distributed from the cash assets yet. I wouldn't spend it yet.

All of the answers here are simply speculation, as you haven't said what sort of tax it is - inheritance tax, income tax, capital gains tax?

The solicitors were under an obligation to explain what sort of tax is due, how it was calculated and why they didn't deduct it before paying it to you. You should therefore go back to them and require them to provide this information.

How much are we talking about in cash terms?