How to Value an Estate for Probate

Why valuation matters

Before you can apply for probate, you need to know the value of the estate. This is not a formality. The value determines whether inheritance tax is owed, whether the estate qualifies for the excepted-estate route, and whether a full IHT400 is required. Getting it wrong — in either direction — has real consequences.

If you undervalue the estate and HMRC later discovers assets you missed or valuations that were too low, penalties under Schedule 24 of the Finance Act 2007 depend on conduct. Standard penalties for careless inaccuracies can range up to 30% of the unpaid tax, deliberate but not concealed inaccuracies up to 70%, and deliberate and concealed ones up to 100%, with disclosure affecting the final percentage. Higher penalties can apply to offshore matters. Interest may also be due. As executor, you are personally responsible for ensuring the valuation is accurate. If you distribute the estate before settling an IHT liability, you can be held personally liable for the shortfall.

If you overvalue the estate, you may pay more IHT than is necessary. Overpayments can be reclaimed, but the process takes time and requires correspondence with HMRC.

Work through each asset type, apply the date-of-death rule and take reasonable care. Keep records showing how you established each open-market value and why the evidence was appropriate.

The golden rule: date of death

Every asset must be valued as at the date of death, using the open market value — the price a willing buyer would pay a willing seller in an arm's length transaction on that date. This rule applies regardless of when you actually obtain the valuation, when probate is granted, or when the asset is eventually sold.

This matters most for property. If a house was worth £400,000 on the date of death but sells 18 months later for £450,000, the IHT return should show £400,000 — provided that was a genuine estimate of market value at the time. If HMRC believes the original valuation was too low, it may refer the matter to the District Valuer Service. The sale price is not automatically the correct figure, but a significantly higher sale price may prompt questions about the original figure.

For quoted shares, the date-of-death value is calculated using the "quarter-up" rule: take the lower of the two prices quoted in the Stock Exchange Daily Official List (or the exchange's current official prices) on the date of death, add a quarter of the difference between the two prices. If the shares were not traded on the date of death (for example, because it was a weekend or bank holiday), HMRC permits the lower of the closing price on the last trading day before death or the first trading day after. HMRC publishes detailed guidance on valuing stocks and shares for IHT including how to handle XD markings, unit trusts, and unlisted securities. For Premium Bonds, contact NS&I bereavement services directly — they will confirm the exact holding and arrange repayment. If you cannot find certificates, NS&I's free tracing service can locate them.

Valuing each type of asset

Different asset types require different valuation methods. The table below summarises the approach for each category, with links to our detailed guides where more depth is needed.

Valuing property

Property can be a significant and uncertain item in an estate, and valuations can vary between surveyors. HMRC guidance does not require a RICS Red Book valuation in every estate. Choose evidence that supports the property's open-market value at death; an estate-agent estimate may help, while unusual or disputed valuations may justify a specialist report. HMRC can query the value, so a particular type of report does not guarantee acceptance.

If the property is unusual (listed building, non-standard construction, sitting tenant, development potential), a RICS valuation may justify specialist advice. A properly incurred valuation fee may be paid as an estate-administration expense, but the IHT400 Notes say post-death valuation fees cannot be deducted when calculating IHT. See our detailed guide to probate property valuation for more on the estate agent vs RICS question and how to handle leasehold and unusual properties.

Personal possessions: the practical approach

For everyday household contents — furniture, kitchen equipment, clothing — a reasonable estimate is acceptable. HMRC does not expect you to value every teaspoon. GOV.UK says you can estimate cheaper assets such as electrical items and ordinary household goods. Keep a room-by-room schedule so the figure is genuinely reasonable.

Jewellery, watches, antiques, art, and collectibles are different. These can be worth far more than they appear. On form IHT407, HMRC asks for individual details of relevant jewellery, antiques, art or collections valued at £1,500 or more each — that threshold is a reporting requirement, not a universal rule that you must pay for a professional valuation. Where an item's value is significant or uncertain, it is sensible to have it valued by a suitable specialist — a jeweller, an auctioneer, or a member of the Royal Institution of Chartered Surveyors. See our guide to valuing personal possessions for category-by-category guidance.

Deductible liabilities

The net estate is the gross estate minus liabilities allowable for the relevant calculation. The inheritance-tax calculation also takes account of exemptions, reliefs, relevant transfers and available nil-rate bands. Getting the liabilities right is just as important as getting the asset values right. Where an allowable liability reduces an amount otherwise taxed at 40%, each pound reduces that tax by 40p; available bands and reliefs can change the result.

Sections 162A to 162C of the Inheritance Tax Act 1984 restrict liabilities connected with excluded property or property qualifying for specified reliefs. Section 175A separately restricts liabilities that are not repaid from the estate, subject to statutory exceptions. See HMRC's non-repayment guidance. If you are dealing with a complex estate, take advice before assuming all debts are fully deductible.

Jointly owned assets

For joint assets, the key distinction is between joint tenancy and tenants in common — and between what forms part of the probate estate and what must still be reported to HMRC for IHT purposes.

Under a joint tenancy, the deceased's share passes automatically to the surviving co-owner by the right of survivorship. It does not form part of the probate estate and does not need to go through the will or intestacy rules. However, it does count for IHT purposes. The deceased's beneficial share must be established from the ownership documents, contributions and circumstances rather than assumed to be 50%. Report it on IHT404 where a full IHT400 account is required; otherwise follow the applicable excepted-estate reporting route.

Under tenants in common, the deceased's share forms part of the probate estate and passes under the will or intestacy rules. It must be included in both the probate application and the IHT return.

Checking against the IHT threshold

Once you have valued all assets and identified all liabilities, you can calculate the net estate and check it against the inheritance tax threshold. The basic nil-rate band is £325,000. If a qualifying home or share passes to direct descendants, the Residence Nil-Rate Band (RNRB) may add up to £175,000. It is capped by the qualifying home value and can be reduced by the £2 million taper, so £500,000 is a conditional maximum rather than an automatic threshold.

If a spouse or civil partner died before the deceased, the executor may be able to claim unused percentages of that earlier estate's standard band and residence band. The claims are separate. Full qualifying transfers can produce maximum bands of £650,000, or up to £1 million where the current estate also meets the residence rules.

Compare the estate with the available nil-rate bands, taking account of relevant lifetime gifts or other chargeable transfers and the conditions for exemptions and reliefs. A net value below a headline band does not by itself settle the inheritance-tax position. You will still need to confirm the inheritance tax values — usually through the probate application if the estate is excepted, or through the full IHT400 if it is not. The rules for excepted estates changed in January 2022 and are now more generous, meaning more estates can use the simplified process. See HMRC's guidance on excepted estates to check whether the simplified process applies.

HMRC challenges and the District Valuer

HMRC can challenge valuations in an IHT return where the figures do not support the open market value. Property values can be subjective and significant, so keep the evidence supporting the figure used.

When HMRC believes a property or land value needs checking, it can ask the Valuation Office Agency (VOA), including District Valuer Services, for valuation advice. If the agreed value is higher than the figure you submitted, HMRC may seek additional IHT and interest.

You can negotiate with the District Valuer. This is not confrontational — it is a normal part of the process. If you have a RICS valuation report, comparable sales evidence, or other documentation supporting your figure, present it. If you cannot reach agreement on a valuation issue, HMRC's VOA manual says it may be referred to the Upper Tribunal (Lands Chamber).

If you get it wrong: corrective accounts

If you discover an asset you missed or realise a valuation was inaccurate, act promptly. Where a full IHT400 account has been delivered to HMRC, corrections are made using HMRC's corrective account, form C4, in England, Wales and Northern Ireland; Scotland uses form C4(S). Form C4 is not an excepted-estate form: if the estate can no longer be treated as excepted, a full IHT400 may be required under the current rules.

If you discover additional assets or a higher valuation after the IHT return has been submitted, you must submit a corrective account and pay any additional tax owed, plus interest from the original payment date. An unprompted disclosure can affect whether a penalty is due and its amount, but it does not guarantee that no penalty will be charged.

Conversely, if you discover that you overpaid IHT — for example, because a valuation was too high, or because you missed a relief — you can claim a refund. For property sold at a loss within four years of death, this is done using form IHT38 (Claim for relief — loss on sale of land). For quoted shares or investments sold at a loss within 12 months of death, form IHT35 applies. GOV.UK's published relief forms cover land and buildings, and qualifying investments. They do not provide a general IHT loss relief for ordinary household goods or chattels.

Common questions