Capital gains tax on inherited property: what executors need to know

Who actually pays, the estate or the beneficiaries?

It depends on timing. If the estate sells the property before transferring it to beneficiaries, any Capital Gains Tax due is paid by the estate itself, using its own £3,000 annual exempt amount. If the property is transferred to a beneficiary first and they sell it later, the gain, still measured from the same probate value, becomes their personal gain, taxed using their own allowance and at their own rate. This is a decision worth discussing with a solicitor or accountant before deciding whether to sell through the estate or transfer first.

What’s the reporting deadline, and why does it catch people out?

Any Capital Gains Tax due on a UK residential property sale has to be reported and paid to HMRC within 60 days of completion, through HMRC’s UK property reporting service, not at the next self-assessment deadline, which is the assumption that catches people out. Missing the 60-day window can mean interest and penalties on top of any tax owed, so it’s worth flagging to the conveyancing solicitor as soon as completion is scheduled, not after it’s happened.

Our full guide, What are the capital gains tax implications of selling an inherited property?, sets out the current rates, allowances and reporting process in detail.

Does selling quickly reduce the tax owed?

It can. Because the gain is measured from the property’s value at the date of death, less time between death and sale generally means less opportunity for the market to move, which can reduce or remove any Capital Gains Tax exposure. This isn’t a reason to rush a sale against the estate’s interests, but it is a practical factor worth weighing alongside everything else when deciding how quickly to move once the estate is ready to sell.

Frequently Asked Questions

Do I have to pay tax twice – Inheritance Tax and Capital Gains Tax?

No. They’re separate taxes on different things. Inheritance Tax is charged on the estate’s value and is normally paid before the Grant is issued. Capital Gains Tax only applies later, and only on any increase in the property’s value after death.

How is the Capital Gains Tax gain worked out?

It’s the difference between the property’s value at the date of death (its probate value) and the eventual sale price, minus allowable costs. If the property sells for the same as or less than its probate value, there’s usually no gain to tax.

What are the Capital Gains Tax rates for 2026/27?

18% within the basic-rate band and 24% above it, after a £3,000 annual exempt amount per individual (UK Capital Gains Tax Calculator). This is general information, not personal tax advice.

When does Capital Gains Tax need to be reported and paid?

Within 60 days of completion, via HMRC’s UK property reporting service — a shorter deadline than the usual self-assessment timetable, and one that’s easy to miss if it isn’t flagged early.

Who pays if the property is transferred to beneficiaries before it’s sold?

The beneficiary who eventually sells it becomes liable for any gain, measured from the same probate value, using their own personal allowance and tax rate rather than the estate’s.

Where can I get advice specific to my estate?

This page is general information. Every estate’s Capital Gains Tax position depends on its own facts, so always confirm the figures with a solicitor or accountant before the sale completes.