The receiving and subsequent management of an inheritance at any point present challenges. Learning to manage inheritance can be both financially and emotionally tough. For many, the news that they are to receive a financial windfall comes as a result of the death of a loved one. This can bring not only a new level of financial responsibility but also a mixture of grief that can make navigating these new changes difficult. Our short guide is designed to answer some of the questions that you might have regarding an inheritance.

What is the first thing you should do when you inherit money?

When you inherit some money one of the first things that you should do is take stock of your current financial circumstances. How you manage an inheritance will depend largely on how much you have inherited. But, if you have any debts, it can be a good idea to set aside enough money to pay these off. 

Remember you don’t have to rush out and spend all of your inheritance at once. Put it in the bank and have a good think about how you could use it. Keeping some in a separate savings account for emergencies can be a good idea for the future as well. 

Do you have to inform HMRC if you inherit money? 

One big question that everyone has about inheritance is about HMRC. They may wonder whether they need to let HMRC know that they have been left some money. The short answer is that no you do not need to inform HMRC. Any tax that is due on the money will normally be taken from the estate of the deceased person and this is dealt with by the executor of the will. An inheritance is not classed as income and therefore is not taxable. However, if there is income generated by the inheritance, for example dividends or interest then this is subject to tax. It will need to be declared. If you are unsure where you stand it is always best to speak to a finance professional.

Can you transfer inheritance to your current account? 

In the short run at least it is a good idea to transfer your inheritance into your current account. This will make paying off any debts much easier. If however you decide that you are going to keep some to one side as a safety net for emergencies, you may prefer to look for a savings account. Then, you can get a better rate of interest. 

How to make inheritance money work for you

Paying off debts and depending on the amount you have inherited is a good way of making your money work for you. It means you will end up paying less interest. Choosing a long term investment account like an ISA is also a good plan that will keep your money safe whilst making it work for you. If you do decide to invest it elsewhere it is important to take your time. Seek professional advice and do not invest it all at once to reduce the risks. 

Using an Inheritance to Invest in Buy-to-Let Property or Serviced Apartments

An inheritance can be both a gift and a responsibility. For many in the UK, it arrives at a pivotal point in life, perhaps after years of careful financial planning, just as questions about stability, income diversification, or long-term wealth building come into sharper focus. While some may consider clearing mortgages or topping up pensions, others see property as a more dynamic, income-generating use of inherited funds.

For those in the South-East of England, particularly around London and its commuter belt, investing in buy-to-let property or serviced apartments offers a compelling proposition. But as with all investments, the devil is in the detail. Understanding the local market, regulatory landscape, and ongoing management demands is critical, not just for protecting your capital, but for ensuring it works for you in the years ahead.

Why Property? And Why Now?

There’s a reason property continues to appeal across generations. Unlike stocks or savings accounts, it’s tangible. You can walk through it, renovate it, rent it out, and in many cases, watch it grow in value over time. Even with the recent economic turbulence, residential property across the South-East has remained a relatively resilient asset class, underpinned by chronic housing undersupply and steady demand from renters.

But what’s changed in recent years is the increasing appeal of alternative rental models, particularly serviced apartments. These sit at the intersection of hospitality and traditional letting, offering furnished, short- to medium-term accommodation, often targeting professionals, corporate travellers, or digital nomads. In cities like London, Brighton, Reading, and Guildford, demand for flexible, quality accommodation has outpaced supply, especially in areas near business hubs, transport links, and cultural centres.

Buy-to-Let vs Serviced Apartments: Knowing the Difference

Traditional buy-to-let properties offer longer-term stability. Tenants typically sign six- or twelve-month contracts, and rental income can be predictable, particularly in well-connected areas like Croydon, St Albans, or Cambridge, where demand remains high among young professionals and families priced out of central London.

Serviced apartments, on the other hand, require more hands-on management but often command higher nightly rates and greater flexibility. Think of a fully furnished flat in Shoreditch or Southbank, rented to a visiting executive for a fortnight, or a short-stay let in a leafy Tunbridge Wells neighbourhood used by a relocating couple in between house moves. With the right location and management structure, the returns can be attractive, especially compared to traditional long-term lets.

Of course, they’re not without their complexities. Local councils may impose restrictions on short-term lettings. The business rates treatment differs from standard residential lettings. And unless you use a management company, there’s far more involved operationally, from cleaning and maintenance to bookings and customer service.

Choosing the Right Location: Beyond the Postcode

When investing inherited funds, emotional decisions can cloud financial ones. It’s tempting to buy somewhere familiar, or close to home. But property investment should be led by fundamentals, transport links, rental yields, employment centres, and tenant demand.

London remains a global magnet, but high purchase prices and tighter regulations can limit yields in prime postcodes. That’s why many savvy investors are looking just beyond the capital. Towns like Watford, Luton, and Maidenhead, for example, have benefitted from infrastructure upgrades and a growing cohort of remote and hybrid workers seeking more space without sacrificing connectivity.

Brighton continues to attract creatives and tech workers, while Reading’s proximity to the M4 corridor and Heathrow makes it a corporate hotspot. Guildford’s blend of affluence and university demand supports both long-term lets and short-stay options. The key is matching the property type to local demand. In a student-heavy area, long lets may be simpler. Near a conference centre or hospital, serviced accommodation might be the better play.

Financing and Structuring the Investment

Using an inheritance as a deposit can unlock borrowing potential, but it’s important to approach this with professional advice. Should you buy in your personal name or set up a limited company? Will you be subject to higher rate Stamp Duty? Are you prepared for the tax treatment of short-stay income versus traditional rent?

Serviced apartments may qualify for capital allowances and certain business reliefs, but they also require business registration and can trigger VAT thresholds. A solid accountant and a mortgage broker with experience in this niche can make all the difference between a profitable setup and a logistical nightmare.

Long-Term Outlook and Lifestyle Flexibility

One of the hidden benefits of investing in serviced property is flexibility. You might block out a week or two for personal use. You may decide to sell one unit and reinvest in another, or convert a successful short-let into a long-term rental if the market shifts. Unlike traditional buy-to-let, serviced accommodation lets you be more responsive to changes in demand, lifestyle, or regulation.

For those inheriting a meaningful sum, the appeal goes beyond the numbers. Property can be part of a broader financial strategy: a hedge against inflation, a retirement income stream, or even a legacy for the next generation.

Intentional Investing

An inheritance can spark a range of emotions, from gratitude to anxiety. It’s often money that comes with meaning, and deserves to be used thoughtfully. Property can offer a way to grow that inheritance while creating income and even personal freedom. But it’s not passive, and it’s rarely simple. It demands due diligence, local insight, and a willingness to treat it like a business.

The good news? In the South-East of England, opportunities still exist, for the clear-eyed investor, the hands-on landlord, or the newcomer willing to learn. Whether it’s a commuter town terrace or a city-centre serviced flat, the right investment, in the right place, can turn an inheritance into a foundation for lasting financial resilience.