Does anyone know about tax on inheritance?

[muriel76]

Hi

I'm looking for advice....will try to keep it simple!

I have been waiting 6 months for probate to be finalised on an inheritance from my gran.

It is being split three ways but in total before funeral/legal costs etc was worth about £108,000.

I thought this meant not paying tax but now it has been finalised the executor (my mum) has told me the solicitor's letter outlining what we all get says it counts as income so we could be taxed (or something along those lines, this was over the phone I have not seen the letter)

I am confused as I thought we would not pay any tax as was under the threshold for inheritance tax.

Can anyone explain?!

I feel really blessed to have this gift from my nan and am not moaning but I am worrying that I need to save some of it for the taxman or whatever and I don't know how much or when it will have to be paid!

Thanks in advance anyone who can help.

Sounds a bit odd to me, isn't the tax threshold around £350,000?

fwiw - I had an inheritance which I received just over a year ago (about nine months after the death) and I paid no tax on it as it was under the threshold. The only thing I had to pay tax on was an amount that was given to me as a gift by the deceased, about three years before she died - in order for it to stay untaxed she had to live for seven years after the gift was given.

its 325k per estate, not per beneficiary.

You should not pay any tax on the inheritance, whether it's 1/3 of £100k or 1/3 of £1m. The executors pay any inheritance tax before the beneficiaries receive the money. (note: if you had any gifts prior to her death like cogitoergosum then you might have some inheritance tax to pay).

If your nan had some investments and those generated income during the six months of probate then you might have to pay tax on your share of that income, but considering the low levels of income generated by investments at the moment this probably isn't much.

I suggest getting hold of the solicitors' letter and reading it through to see what sort of tax (inheritance, income, capital gains) they're actually talking about and taking it from there.

Thanks everyone!

I expect the letter in the next few days so hope to make more sense of it all then.

Thanks again.

If any income has been received in the Estate that's paid gross eg rental income or something where tax hasnt been taken off then income tax will be due on that but your share of the estate's capital isnt income.

That was my thought too Kath, perhaps there are some dividends or interest income.

If it was a private pension then there is 35% tax. This happened to us.