by SunLife Content Team
Last updated 25th March 2024
4 min read
When somebody dies, an inheritance is often passed on to their surviving loved ones. This may include money, but also personal belongings (such as jewellery) or even more valuable items (such as their house).
Inheritance can be a complicated process happening at an already tough time. But because the size of an inheritance impacts how much tax may need to be paid in the UK, it's also important to understand what may be considered a large amount.
This article will look at the average size of an inheritance in the UK, as well as what's a bigger value. We'll also consider the tax implications and some emotional impacts of receiving a large inheritance from a loved one.
What is the average inheritance in the UK?
According to the Office for National Statistics(www.ons.gov.uk opens in a new tab), the average inheritance that a person in the UK receives is around £11,000. However, this is just a fraction of the average net estate value in the UK, which is around £334,000(www.nimblefins.co.uk opens in a new tab).
Some people may therefore expect to receive a lot more from an estate than they actually do – but as we'll explore shortly, there are a few reasons why this might be the case. For many other people, however, the average of £11,000 would be a significant amount of money.
What is considered a large inheritance in the UK?
What's considered a large inheritance can be very subjective, and it's therefore hard to give a figure that everyone agrees on. In the UK, some say a net estate of more than £500,000(www.nimblefins.co.uk opens in a new tab) – with the after-tax inheritance for a single beneficiary being anywhere above £100,000(dontdisappoint.me.uk opens in a new tab).
But there are factors that can affect how much someone inherits from an estate. While the total estate value might be considered large, the actual amount someone receives can vary based on how many people are inheriting and the tax that has to be paid.
What you need to know about Inheritance Tax
In the UK, the Inheritance Tax threshold(www.gov.uk opens in a new tab) is currently £325,000. This means that any amount over the threshold is taxed at 40%. Many estates are below this value, and so don't get taxed at all – but there may be other financial implications around inheritance to consider.
Even smaller inheritance sums could affect your entitlement to Universal Credit. If you have over £6,000 in savings after receiving an inheritance, you may start to lose some of your Universal Credit – and if you have over £16,000 in savings, you may no longer receive any payments.
Your estate is usually exempt from Inheritance Tax if everything above the £325,000 threshold is passed on to your spouse, civil partner, or even a charity.
Learn more about the Inheritance Tax threshold in the UK(www.gov.uk opens in a new tab).
Emotional impacts of a large inheritance
Losing a loved one can be a difficult moment in your life. While trying to come to terms with the loss, you also have a great number of things to take care of.
Dealing with inheritance is just one of the many tasks on your mind during this tough period, but you're not alone. Plenty of free emotional support is available to help you through everything you face.
It's important to take care of yourself and your loved ones, seeking out support if you need it. Try not to see the inheritance you receive as a burden, but instead as an opportunity to help those around you and to fulfil your ambitions.
What to do with a large inheritance
It can be a shock to receive a large amount of money, and deciding what to do with your inheritance might be overwhelming. If you've already paid off your debts and put money into savings or investments, you might be wondering what else you could do with the cash.
One option might be to donate to a charity that's close to your heart. It could be a comfort to know that some of your loved one's inheritance has been put towards helping others.
You could also spend money on your close friends and family – by taking them for a meal at their favourite restaurant, for example – and support them in a small way while they grieve too.
When the time feels right, it could also be a chance to make a dream purchase – such as a big holiday or nice car. After all, we're sure your loved one would want you to enjoy the money that they've left behind.
Whatever your preferences, it's always sensible to seek financial planning advice before making any big decisions.
Continue reading
We hope this article has helped you understand what are average and large inheritance sums, as well as some of the considerations and impacts of receiving money after somebody dies.
If you're thinking about leaving something behind for your loved ones, SunLife's Guaranteed Inheritance Plan may be of interest to you.
And to learn more about inheritance, take a look at some of our other articles:
- A complete guide to inheritance
- Why people choose to leave an inheritance
- What is the Guaranteed Inheritance Plan?
- What is the inheritance tax threshold in the UK?
The thoughts and opinions expressed in the page are those of the authors, intended to be informative, and do not necessarily reflect the official policy or position of SunLife. See our Terms of Use for more info.
