Tax duties of those named as beneficiaries

Being named as a beneficiary in a Will - meaning you will be inheriting property, possessions or a sum of money - can have certain implications with regard to the tax you have to pay.

Income Tax

Being named as a beneficiary can affect your tax liability. Your situation in respect to Income Tax depends on whether you receive a specific gift , the residue or income from residue of the estate.

Specific Gifts

Specific gifts can be money or an asset that you receive from the deceased’s Will. You will not usually have any Income Tax liability unless it’s an asset that produces income or your legacy was paid late and your Personal Representative pays you interest on it.


It is the responsibility of the Personal Representative to work out the residuary income of the estate for each year that it is being administered. A share of that income may be paid to the beneficiaries during the administration or after the period of administration has concluded. If you receive a payment during the administration it will be considered as income for the tax year.

Be aware however that this income received from the residue may make you liable for Income Tax at a higher band or may cause you to pay more tax if you receive an age-related allowance. If either of these is the case, you should inform the HRMC.

These changes in income will affect your income tax so whenever you get a payment from your Personal Representative make sure that you ask them for a written statement using form R185. This form will show you how much tax is treated as having been paid on income and how much income to write on your tax return for that year.

Capital Gains Tax

Receiving an asset through a Will or intestacy does not automatically make you liable for Capital Gains Tax. However, if you later sell that asset for more than its value at the date of death, this may give rise to a charge to Capital Gains Tax.

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