Inheriting an Investment portfolio is rarely just about money - and the tax rules are unforgiving for families who miss key steps. UK Inheritance Tax (IHT) and CGT can both apply, depending on the asset and route.

Key takeaways

  • ISAs do not survive death tax-free - except via Additional Permitted Subscriptions (APS) for spouses (HMRC).
  • Pensions remain a tax-efficient route to pass on Wealth (HMRC).
  • Probate must be completed before transferring most Assets.
  • Step-up to Market Value on inheritance is the CGT Acquisition cost (HMRC).
  • Selling without planning can crystallise gains.

Top mistakes

Examples include withdrawing instead of transferring, missing APS deadlines for ISAs, selling before probate, and overlooking unused IHT allowances.

Tax wrappers and death

ISAs lose their Tax Shelter on death, but spouses can use APS. Pensions can often pass to nominated beneficiaries efficiently.

Practical steps

Get professional advice, get up-to-date valuations and check all wrappers and beneficiary forms.

What this means for UK investors

Inheritance is one of the moments where small process mistakes cost the most. UK families benefit from getting tax and legal advice early.

Risks to watch

  • Missing 3-year APS window for spousal ISA.
  • Selling without considering CGT step-up.
  • Forgetting nominated-beneficiary forms on pensions.
  • Future IHT rule changes (Budget risk).