Capital Gains Tax when an estate sells an inherited house: a £30,000 gain over probate value is taxed at £7,200 in the estate, £6,018 for a beneficiary on £30,000 income

An executor has sold the family house six months after the death. It went for more than the probate value, and the beneficiaries ask whether anyone pays tax on the difference. The answer is that the sale can produce a Capital Gains Tax bill, and that who sells it changes the rate. This guide works one house through the GOV.UK rates, and flags the allowance question the page leaves open.

The rate on GOV.UK

The rates page is short. For individuals who are higher or additional rate taxpayers the rate is 24%. For basic-rate taxpayers the page says to add the gain to taxable income: the part that falls within the basic Income Tax band is taxed at 18% and any amount above it at 24%. Its worked band for 2026 to 2027 is £37,700. The one line for estates is: "Trustees and personal representatives pay tax at 24% from 6 April 2026." There is no basic-rate step for an estate.

The page also notes that you do not usually pay when you sell your main home. That describes the seller's own home. A house held by the estate after the owner has died is a different position, and I have not read the page that deals with it, so check HMRC's guidance on property sold by personal representatives before you rely on that sentence for an estate sale.

One house, sold two ways

The house had a probate value of £300,000 and sold for £330,000, so the gain is £30,000. The gain is measured from the value at death, not from what the deceased paid for it.

The beneficiary is assumed to have £30,000 of taxable income, which leaves £7,700 of the £37,700 band. Our arithmetic, before any relief the person may have. The £1,182 difference comes from the estate paying 24% on everything, and from the beneficiary having an allowance and some band at 18%.

The allowance question

The allowances page gives £3,000 for individuals and £1,500 for trusts. It does not mention personal representatives, and it does not give a tax year. I did not find a figure for an estate on that page, so the left-hand column assumes none. If HMRC's guidance gives an estate an allowance for a limited period after death, the estate's tax falls by 24% of that amount: £720 if it were £3,000. That is the single line to confirm before the figure goes in the accounts.

Why the order of events matters

A beneficiary who is a higher-rate taxpayer pays 24% either way, and the allowance is the only difference. A beneficiary with little other income is where the 18% band matters, and where the executors' timing of the sale is worth a conversation. Several things may pull against it: the beneficiaries may want the money quickly, the estate may need the cash for debts, and an assent to a beneficiary before sale needs the will's terms to allow it. The tax is one input. It is not a reason to delay by itself.

What to put on the file

• Probate value, with the valuation evidence. The gain is measured from it.
• Sale price and costs of sale. I have used the headline gain; allowable costs reduce it.
• Who sold, and on what date. The estate or a beneficiary, and the date against the 24% start of 6 April 2026.
• Who bears the tax in the accounts. It is a deduction from the estate, so it affects the distribution.

For where the tax sits in the final figures, see the estate accounts template, and for when the money can go out, when executors can distribute. The estate's own income tax returns are set out in the SA900 deadlines.

Overlyft builds AI staff who join your private-client team and prepare the gain-over-probate-value sum from the valuation and completion statement, for each beneficiary scenario, for a fee-earner to check before the executors see it.

This is general information, not legal or tax advice. Check GOV.UK and HMRC's guidance before you advise.