The house arrives with two taxes attached, and they work differently. Inheritance Tax is the estate’s problem and is settled before the house passes. Capital Gains Tax is the beneficiary’s, and it does not arise on inheriting at all. It arises later, on any rise in value from the day of death, and the same rules explain why putting a child on the deeds solves nothing.
Nothing on inheriting
GOV.UK says that when you inherit an asset, Inheritance Tax is usually paid by the estate of the person who has died, and you only have to work out if you need to pay Capital Gains Tax if you later dispose of the asset (GOV.UK, Capital Gains Tax, checked 1 November 2026).
HMRC’s helpsheet for executors puts it directly: there is no CGT charge when someone dies (HMRC helpsheet HS282, checked 1 November 2026). Whatever the person paid for the house decades ago is wiped; the gain to that point is never taxed.
The probate value is your starting point
The helpsheet says the assets the deceased owned on the date of death are treated as passing at their market value on that date, and that when the administration is complete the remaining assets are treated as passed to the beneficiaries on the date of death at that value (HMRC helpsheet HS282, checked 1 November 2026).
Its example is a man who dies owning a house valued at £175,000. Administration finishes fifteen months later with the house worth £200,000, and the beneficiaries are treated as having acquired it on the date of death at £175,000. If they then sold at £200,000, our extension of HMRC’s example, the gain would be £25,000. The value declared for probate is the figure that sets the base, which is a reason to have the house valued properly at the time.
The rate, the allowance and the 60 days
GOV.UK says that for gains made from 6 April 2026 a higher or additional rate taxpayer pays 24%, and a basic rate taxpayer pays 18% on the part of the gain that fits within the basic rate band and 24% above it (GOV.UK, Capital Gains Tax, checked 1 November 2026).
The gain is added to income for that test, so a large gain reaches 24% even for someone on a modest pension.
The tax-free allowance, the annual exempt amount, is £3,000 (GOV.UK, Capital Gains Tax, checked 1 November 2026). And GOV.UK says that for a UK residential property with a completion date on or after 27 October 2021 the gain must be reported and the tax paid within 60 days (GOV.UK, Capital Gains Tax, checked 1 November 2026). That clock runs from completion, not from the tax year end.
If you move in
A beneficiary who makes the inherited house their only home is covered from then. GOV.UK says you do not pay Capital Gains Tax on your only home if you have lived in it as your main home throughout, with conditions on letting, business use, the grounds and not having bought it to make a gain (GOV.UK, Tax when you sell your home: private Residence Relief, checked 1 November 2026).
The time you have owned it runs from the date of death, so the relief covers the period from when you move in until the sale; a gap before you moved in is not covered, apart from the final months of ownership that HMRC always allows. That follows from the two rules together rather than being a sentence on GOV.UK. A house left empty or let for years first has only part of its gain relieved.
If the executors sell it instead
Where the estate sells the house before passing the money on, the gain is the estate’s. HMRC’s helpsheet says the personal representatives have the annual exempt amount for disposals in the tax year of death and the two following years (HMRC helpsheet HS282, checked 1 November 2026), and that they too must report and pay within 60 days of completion.
Which route is better depends on the beneficiaries’ own tax positions and allowances, and is a question for whoever is administering the estate. Our probate property page covers selling during administration.
Selling for less than the probate value
A fall in value works the other way. There is no gain, and a loss can be set against other gains. For the estate, GOV.UK says form IHT38 claims relief where land or buildings that bore Inheritance Tax are sold at a loss, in most cases within three years of the death (GOV.UK, claim for relief — loss on sale of land (IHT38), checked 1 November 2026).
GOV.UK adds that some sales within four years of the death may also qualify (GOV.UK, claim for relief — loss on sale of land (IHT38), checked 1 November 2026).
The Inheritance Tax is then recalculated on the sale price rather than the probate value. Our paying the bill page covers instalments on a house that is being sold.
Being added to a parent’s deeds
It does not work while the parent stays put, and the reason is a rule called gift with reservation. HMRC’s manual example is a father who conveys his house into joint names with his daughter; she does not move in and he carries on living there rent-free.
HMRC says she has not assumed possession and enjoyment of the gift, so it is a gift with reservation, and the half share stays in his estate (HMRC Inheritance Tax Manual, IHTM14332, checked 1 November 2026).
The same example says that if he had paid her a full market rent, or if she later moved in with him, the reservation would end. Meanwhile giving away the share is a disposal by him for Capital Gains Tax, treated as if he had sold it, and GOV.UK says a gift is valued at market value on the date of the gift (GOV.UK, what you pay it on, rates and allowances: Market value, checked 1 November 2026). His own residence relief covers that while it is his home. The daughter’s later sale of a house she never lived in is not covered, and any rent he pays her is her income for tax. Our gifts page covers the reservation rule, and the care fees deprivation page the council’s version of it.
Shares: the quarter up price on the day of death
Shares are valued for probate by a rule of their own, and that figure becomes the cost for Capital Gains Tax later. HMRC says the value used is the quarter up price at the date of death, the figure a quarter of the way up from the lowest to the highest closing prices (HMRC IHTM18093, checked 1 November 2026).
The manual gives a worked example: where the end of day quotation was 1091p to 1101p, the quarter up price is 1091 plus 2.5, or 1093.5p a share (HMRC IHTM18093, checked 1 November 2026).
That figure then carries over. Where the value of the shares has been ascertained for Inheritance Tax, the same figure is used as the acquisition cost for Capital Gains Tax following a death (HMRC IHTM18093, checked 1 November 2026). The gain on a later sale is the sale proceeds less that value, less the costs of selling.
Selling shares has no 60 day deadline
The 60 day clock is a residential property rule and does not reach shares. GOV.UK’s reporting table gives 60 days for a UK residential property sale, and for other gains reports them in the tax year after the disposal through a Self Assessment return (GOV.UK, what you pay it on, rates and allowances: Overview, checked 1 November 2026).
Who sells matters more than when. If the executors sell shares belonging to the estate, any gain since the date of death is the estate’s, and the estate has its own annual exempt amount, the same £3,000 figure as an individual (GOV.UK, Capital Gains Tax rates and allowances, checked 1 November 2026).
Transferring them instead moves the tax with them. GOV.UK says you do not pay Capital Gains Tax from the estate if you transfer assets directly to a beneficiary (GOV.UK, Managing and selling assets, checked 1 November 2026), so the beneficiary sells using their own allowance and their own rate band, which is usually the better result where several people inherit.
Joint owners, and a spouse
How the house was held decides what passes. GOV.UK says joint tenants have equal rights to the whole property, which goes automatically to the other owners on death and cannot be left by will, while tenants in common can own different shares and leave their share by will (GOV.UK, Joint property ownership, checked 1 November 2026).
Between spouses there is no gain on transfer. GOV.UK says you do not pay Capital Gains Tax on assets you give or sell to your husband, wife or civil partner, unless you separated and did not live together at all in that tax year, or gave them goods for their business to sell on (GOV.UK, Capital Gains Tax, checked 1 November 2026). A widow who inherits her husband’s shares takes them at their value on the day he died, pays nothing then, and is taxed only on a later sale above that figure; the dividends are income in the usual way. Our Inheritance Tax hub covers the spouse exemption on the estate side.