What Happens When You Inherit a House from Your Parents?
Estimated reading time 14 minutes
Inheriting a house from your parents can be both emotionally overwhelming and financially complex. Whether you’re considering keeping, renting, or selling the property, it’s crucial to understand the tax implications and legal responsibilities in 2025.
Who inherits a property if there is no will?
Property inheritance can feel confusing and scary, especially if there’s no will. In that case, family conflicts can become an issue if others are interested in inheriting the property. For those who are an only child, the inheritance process is somewhat more straightforward. If you’re the only child, then you won’t have to deal with contentious relatives. However, there are still things you need to know to avoid making costly mistakes.
Can a partner inherit if not married or in a civil partnership?
When no will is left, these people are unable to inherit:
Unmarried partners: if they lived with the deceased without a marriage or civil partnership, they have no right to the estate.
Relations by marriage: in-laws are not able to inherit property. This includes all in-laws such as sisters, brothers, or even distant cousins.
Close friends: friends of long- or short-standing are not able to inherit if there is no will.
Carers: while they live with and take care of the deceased, they are not qualified to inherit the property. This is against the law.
Probate and the Grant of Letters of Administration
When someone passes away, their estate (including money, property, and possessions) must be handled according to UK inheritance law. If the deceased did not leave a will, this process is known as “administration,” and you will need to apply for a Grant of Letters of Administration to gain legal authority to deal with their estate.
This legal document gives you the right to access the deceased’s assets, settle any debts, and distribute the estate according to the rules of intestacy.
Who can apply for the Grant of Letters of Administration?
If there is no will, the following people may apply:
- A surviving spouse or civil partner
- The deceased’s children (if there is no spouse or partner)
- Other close blood relatives, in order of priority (parents, siblings, etc.)
The person who applies becomes the administrator of the estate. If multiple people are entitled, up to four administrators can apply jointly.
How is probate different?
Probate is the general term used for the legal process of administering an estate. If a will exists, the executor named in the will applies for a Grant of Probate. If there’s no will, a Grant of Letters of Administration is issued instead.
Even though the names are different, both processes serve the same purpose: giving someone legal authority to manage the deceased person’s estate.
- The total value of the estate is below £5,000–£10,000 (check with individual banks).
- The assets are held in joint names and pass automatically to the surviving owner (e.g. joint bank accounts or a jointly owned property).
- The deceased had no property, land, or shares.
However, each bank or institution may set its own limit. Some may release funds up to £50,000 without probate. Always check with the relevant organisation first.
2025 Update: Is there a new probate threshold in the UK?
As of 2025, there is no fixed estate value threshold set by the UK government for when probate is required. However, many financial institutions have raised their internal limits.
Here are general guidelines for 2025:
| Institution Type | Likely Probate Threshold (2025) |
|---|---|
| Banks / Building Societies | £20,000 – £50,000 |
| NS&I | £5,000 |
| Jointly owned property | Usually passes automatically |
| Property in sole name | Probate is always required |
It's recommended to contact each bank, lender, or asset holder to determine whether they require probate before releasing funds.
Who is legally allowed to handle the estate?
The only ones who have a legal right to dealing with the estate of the deceased are:
- A child of the deceased
- Deceased’s spouse
However, before these individuals are able to deal with the estate, they must first apply to the Probate Registry for a “Grant of Letters of Administration.” You can do this on your own or hire a solicitor to apply on your behalf.
The grant makes you the administrator of the estate. What’s more, the document contains essential information that includes proof of building societies, banks, and other organisations you can access. This gives you the right to distribute funds that belonged to the deceased. Unfortunately, it’s also possible you may have to pay part or all of the inheritance tax that may be due on the estate before being issued the grant.
This entire process is referred to as “obtaining probate,” even though there is no will.
Do you have to obtain a grant? No, not always.
For instance, you may not need a grant if the value of the deceased’s estate is under £10,000 and does not include land, property, or shares.
You also won’t need a grant if the estate is held jointly, and the surviving joint owner will assume full ownership. This may happen, for instance, if one sibling buys out the other sibling’s share in the home.
More information can be found by visiting the GOV.UK probate guidance page.
Who can inherit the deceased’s estate?
If there’s no will, who can inherit the deceased’s estate? The law has rules that govern who will inherit an estate.
1) The deceased was unmarried or their partner was already deceased
In this case, the deceased blood relatives need to make this decision. In most cases, the estate should belong to the closest blood relative. This means that a surviving child to the deceased automatically inherits the home.
If there are no blood relatives, then the government takes over the home.
2) You’re the surviving partner to the deceased
If you’re married and your partner dies, then all their property is transferred to you. This can include a pension’s property, car, and other assets included in the estate. This also applies when you’re separated from your spouse but are not legally divorced.
3) There’s a surviving partner and children
The estate must be valued at over £270,000 for the children to qualify to inherit. If the estate is over this amount, the children inherit equal shares from half of the estate that exceeds £270,000.
4) If the deceased’s children are stepchildren, adopted or from a previous relationship
In this case, the law makes it clear that children in these relationships qualify to inherit their deceased parent’s home. However, in the case of stepchildren, you can only inherit the house if there’s a will that includes legal documentation that proves your adoption status.
In addition, the child must be at least 18 years of age before they may claim the inheritance.
5) The deceased has surviving children but no partner
If there’s no will, then children collectively inherit the estate before dividing it amongst themselves. This may seem very straightforward; however, if there are many individuals who have ownership and one of them wants to sell, then how is this arranged? It can quickly become a problem if the other owners don’t want to sell.
6) The deceased has no surviving relatives
In this case, the estate becomes “vacant goods” or “Bona Vacantia.” When this happens, the Treasury Solicitor may take over the home and sell it, passing the money on to the Crown.
Do you pay Inheritance Tax on a parent’s house?
When you inherit a home, you may want to know whether it’s taxable or not. The answer is yes, but not always. The determining factors on whether or not you’ll need to pay taxes are the house and the value of other assets in the estate.
The first tax to consider is the inheritance tax, which is a threshold tax. Currently, the inheritance tax rate is 40%. The current threshold is £325,000. However, you may not pay tax on anything above this when inheriting your parents’ home. The reason is that in 2017 the government created the Residence Nil-Rate Band (RNRB). The RNRB is a scheme designed to add up to another £175,000 to the tax-free allowance if the deceased left behind the property.
The amount of the allowance you can have depends on how much the house is worth. For a home over £175,000, you have the full allowance. This means you pay inheritance tax on anything above £500,000 (£325k + £175k). For a home valued under £200,000, you may not have to pay tax on the extra £25,000 unless you also inherited assets worth over £300,000.
If you’re in England or Wales, you must pay inheritance tax on the deceased person’s estate if it is over the threshold. In addition, you may be required to pay the tax on savings, stocks, and potential pensions.
| Scenario | Inheritance Tax Owed? |
|---|---|
| House below threshold | No |
| House + estate above threshold | Yes |
| Joint ownership with surviving partner | Possibly not |
| House gifted over 7 years ago | Maybe exempt |
When do you pay Inheritance Tax?
- Inheritance tax is due 6 months after the end of the month in which the person died.
- For example, if the person died in March, payment must be made by 30th September.
- Late payment results in interest being charged from the due date until the tax is paid in full.
Who is responsible for paying Inheritance Tax?
The executor (if there is a will) or administrator (if there is no will) is legally responsible for ensuring that the inheritance tax is paid to HMRC. They must do this before distributing the estate to beneficiaries.
However, in some cases, especially with property, the executor can choose to pay the tax in instalments over 10 years, though interest will still accrue on the outstanding balance.
It's worth noting that beneficiaries do not usually pay inheritance tax themselves, unless the estate's value exceeds the threshold and the tax cannot be covered by the estate’s assets.
What happens if you miss the Inheritance Tax deadline?
If the tax is not paid within 6 months:
- Interest will be added daily to the unpaid amount.
- HMRC may take enforcement action if the payment is significantly delayed.
- The probate or letters of administration may also be delayed until some or all of the tax is paid.
You don’t have to wait until the 6-month deadline. If you have access to funds, you can make an early payment. HMRC allows this, and it can reduce or eliminate interest charges.
For property and other non-liquid assets, you may choose to:
- Pay in 10 annual instalments (for certain assets like houses).
- Pay the first instalment by the 6-month deadline, then the rest over time.
Other taxes you might face when inheriting a house
In addition to the inheritance tax, you may also be subject to other taxes when inheriting a home from your parents. The additional taxes may include:
- Income tax: you may not be required to pay income tax on the home right away; however, you may have to pay the tax in the future. For instance, renting the home makes you liable to pay income tax on the rental income.
- Capital Gains Tax (CGT): this will apply if you choose to sell the property. The current capital gains tax is 18%.
Do you pay Stamp Duty on an inherited house?
No. You won’t have to pay Stamp Duty when inheriting your parents’ house. This duty is only paid when buying a home.
However, if you buy the property from other joint owners, you may have to pay the Stamp Duty. It’s best to seek out the advice of a financial advisor in these cases.
Can you legally avoid Inheritance Tax?
Yes. If you want to avoid the inheritance tax and the Stamp Duty, then you may be able to get out of paying them by buying your parents’ home. However, this doesn’t always work.
For one thing, your parents will need to sell the home to you below its market value. Here, the equity in the house is a gift. It’s also possible for your parents to give you the home and continue to live in it.
Another option is if your parents are still alive seven years after gifting you the home, then you will not have to pay the inheritance tax. However, you will have to pay the income tax.
Keep in mind that there are some risks involved with these methods. For example, if you die first after inheriting your parents’ home, the property will then go to your spouse or children. In that case, your spouse or children could evict your parents.
Another issue is that your parents could be accused of withholding assets from you. For instance, they could be accused of gifting you their home in order to become eligible to receive local authority funding.
These are not scenarios you want to happen, and there are other situations that could be just as challenging.
What to do if you want to sell the inherited house?
There’s a lot to consider when inheriting a home from your parents. If you’re not ready to assume the responsibility of owning a home, there are options available, including renting the home or selling it quickly.
However before making any major decision, we highly recommend contacting a financial advisor who can help you find the best options for dealing with your inheritance.
Looking to sell your inherited property? Get in contact with Bettermove today. We can help you sell your house for free. Find out more with out step by step guide to selling your house. We can sell your house online for free when it suits you.
