Received an Inheritance? The First 6 Things to Do With It in 2026

Step 1: Give Yourself Time Before Acting

An inheritance almost always follows a bereavement, and financial decisions made in the immediate aftermath — while grieving — are more prone to being rushed or driven by emotion rather than sound planning. Parking the money in an instant-access savings account for a few weeks or months while you think clearly carries essentially no financial cost, and gives you space to make better decisions on everything that follows.

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Step 2: Understand the Tax Position (It's Usually Simpler Than People Assume)

The core principle: the estate deals with Inheritance Tax; you deal with Income Tax and CGT only on what the inherited asset does after you own it.

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Step 3: Clear High-Interest Debt First

Before investing or locking money away, clearing expensive debt is usually the highest-return, lowest-risk use of an inheritance:

Paying off a 25% APR credit card is a guaranteed 25% "return" — a bar that few investments can reliably clear, especially after tax and risk are considered.

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Step 4: Build (or Top Up) Your Emergency Fund

Before committing money to long-term investments or major purchases, most financial planners suggest holding 3-6 months of essential living costs in an instant-access account or Cash ISA. This protects you from needing to sell investments at a poor time, or take on new debt, if something unexpected happens shortly after you've committed the inheritance elsewhere.

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Step 5: Use Tax-Advantaged Allowances Systematically

A meaningful inheritance often exceeds what can be sheltered from tax in a single tax year:

Practical approach for a large sum: use this tax year's full ISA allowance immediately, hold the remainder in easy-access savings or a general investment account, then use each subsequent tax year's allowance from 6 April until the inheritance is fully sheltered — this can take several years for a genuinely large inheritance.

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Step 6: Consider Your Own Inheritance Tax Position

If the inheritance is substantial, it may be worth reviewing your own estate planning — a large inheritance can push your own estate above the £325,000 nil-rate band (plus £175,000 residence nil-rate band where applicable) for the next generation. Gifting some of the inheritance onward, within your own annual exemptions, or considering trust structures for very large sums, is worth discussing with a professional adviser if the amount is significant enough to affect your own IHT position.

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Special Case: Inherited Property

If you inherit a house or flat, additional decisions arise quickly:

1. Keep, let, or sell — each has different tax and practical implications (Section 24 mortgage interest restriction applies if you let it with a mortgage; CGT applies on sale based on gain since date of death, not since the original purchase by the deceased).
2. Stamp Duty on your own future purchases — owning an inherited property (even one you don't live in) can trigger the additional-property SDLT surcharge if you later buy another home, unless specific reliefs or timing exemptions apply — check this carefully before your next house purchase.
3. Probate and property maintenance costs — factor in ongoing costs (insurance, utilities, maintenance) while decisions are made, which can take months.

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A Simple Order of Operations

1. Pause — don't rush any major decision in the first few weeks.
2. Confirm the tax position (usually straightforward for the beneficiary).
3. Clear high-interest debt.
4. Build/top up a 3-6 month emergency fund.
5. Use ISA and pension allowances systematically across tax years.
6. Review your own estate and IHT position if the sum is substantial.
7. Take professional advice for inheritances above roughly £50,000-£100,000, or anything involving property, pensions or business assets.