Last reviewed: October 2026 When someone dies, one of the first responsibilities of their executor or administrator is to establish the value of their estate. This is an important part of the probate process and helps determine whether Inheritance Tax needs to be paid. However, valuing an estate is not always straightforward. It can involve property, savings, investments, personal possessions, debts, lifetime gifts and assets held jointly with other people. Even where an estate is below the Inheritance Tax threshold, personal representatives may still need to provide estate values when applying for probate. Getting these figures right is important. Incorrect valuations can lead to HMRC enquiries, additional tax, delays in obtaining probate and potential personal liability for executors. This guide explains how to value an estate for Inheritance Tax, which assets and liabilities must be included, how the current tax thresholds work and when professional valuations may be needed.
Valuing an estate means establishing the financial value of everything a person owned when they died, together with any other assets or gifts that must be considered for Inheritance Tax purposes.
The valuation must generally reflect what the assets were worth on the date of death, rather than when probate is granted or when the assets are eventually sold.
For example, if someone owned a property worth £350,000 when they died, that is generally the starting value for Inheritance Tax purposes, even if it later sells for a different amount.
Once the assets have been valued, allowable debts and liabilities are considered to establish the estate's net value.
Executors must then apply any relevant exemptions, reliefs and available tax thresholds to determine whether Inheritance Tax is payable.
The executor named in the deceased person's will is normally responsible for valuing the estate.
If there is no valid will, the responsibility falls to the administrator entitled to deal with the estate under the intestacy rules.
These individuals are collectively known as personal representatives.
They must identify the deceased's assets, obtain appropriate valuations, establish outstanding liabilities and ensure the correct information is reported to HMRC and the Probate Registry.
Executors can carry out some of this work themselves, particularly where the estate is straightforward. However, more complicated estates may require assistance from solicitors, accountants, surveyors or specialist valuers.
Personal representatives remain responsible for ensuring the information is accurate, even where professionals have been instructed.
The first step is identifying everything the deceased owned or had a financial interest in when they died.
This will usually include property and land, bank accounts, savings, ISAs, investments, shares, vehicles, jewellery, antiques and other personal possessions.
Business interests, certain trust assets, money owed to the deceased and some insurance or pension benefits may also need to be considered.
Assets held outside the UK can also be relevant, depending on the deceased's residence history and the applicable Inheritance Tax rules.
Executors should review financial paperwork, bank statements, property records, tax documents and correspondence to identify assets.
It is also worth contacting the deceased's solicitor, accountant or financial adviser where they may hold relevant information.
Property is often the most valuable asset in an estate, making an accurate valuation particularly important.
For Inheritance Tax purposes, property should generally be valued at its open market value on the date of death. This means the price it might reasonably have achieved if sold on the open market at that time.
Executors can obtain valuations from local estate agents or instruct a qualified surveyor.
Where the property is valuable, unusual, difficult to sell or likely to create an Inheritance Tax liability, obtaining a formal valuation from a RICS-qualified surveyor may be appropriate.
The valuation should consider the property's location, condition, size, comparable sales and any factors affecting its marketability.
If the property subsequently sells for a different amount, the executors may need to update HMRC. Where values are not final, or fewer than 18 months have passed since death, HMRC generally needs to be informed if the overall estate value changes by more than £50,000 before exemptions and reliefs. Changes involving land or buildings can also trigger a reporting requirement regardless of this threshold.
It is important not to deliberately undervalue property to reduce Inheritance Tax. HMRC can challenge valuations and may refer them to its Valuation Office or District Valuer for review.
Bank accounts and savings are usually more straightforward to value.
Executors should contact each bank or building society and request a written confirmation of the balance held at the date of death, including any interest accrued up to that date.
This applies to current accounts, savings accounts, fixed-term deposits and Cash ISAs.
ISAs are not automatically exempt from Inheritance Tax. Although income and gains within an ISA receive favourable tax treatment during lifetime, their value will usually form part of the estate for IHT purposes.
Where accounts are held jointly, executors must establish how much of the money belonged to the deceased.
A joint account does not necessarily mean that exactly half the balance belonged to each person. The true beneficial ownership may need to be considered.
Executors should retain the statements and valuations supplied by financial institutions as supporting evidence.
Shares, investment funds, bonds and other financial investments must also be valued at the date of death.
For quoted shares, HMRC generally uses the quarter-up rule. This takes the lower quoted price and adds one quarter of the difference between the lowest and highest quoted prices for the relevant date.
An investment provider or stockbroker can usually supply a probate valuation showing the relevant holdings and values.
Unlisted shares and interests in private businesses can be more complicated. Their value may depend on company assets, profitability, debts, future prospects and ownership arrangements.
Professional advice is particularly important where the deceased owned shares in a family business or had substantial investments.
Where qualifying quoted shares are sold at a loss within twelve months of death, executors may be able to claim Inheritance Tax loss relief. This allows the lower sale value to replace the date-of-death value, subject to the relevant conditions. A similar relief may apply to land sold at a loss within four years of death.
These reliefs must be claimed and do not automatically apply to every investment or property sale.
Yes. Personal possessions form part of the estate and must be considered when calculating its value.
This can include furniture, jewellery, watches, vehicles, artwork, antiques, collections and other valuable belongings.
Ordinary household items can generally be valued using reasonable second-hand selling prices. Their replacement cost or original purchase price is not necessarily their market value at death.
More valuable items may require a professional valuation.
HMRC guidance suggests considering professional valuations for individual possessions worth more than £1,500, particularly where the estate requires detailed reporting.
Executors should also check whether the deceased owned valuable collections, such as coins, art, antiques or jewellery, which may not be immediately obvious from financial records.
Keeping photographs and written valuations can help support the figures used.
Jointly owned assets can create confusion because the amount included for Inheritance Tax may differ from what passes through probate.
Where property is held as joint tenants, ownership normally passes automatically to the surviving joint owner.
However, the deceased's beneficial interest must still be considered when valuing the estate for Inheritance Tax.
Where property is held as tenants in common, the deceased's share passes according to their will or the intestacy rules.
For jointly owned property, HMRC will commonly accept a discount of around 10% when valuing a share held with someone other than a spouse or civil partner, reflecting the difficulty of selling a partial interest. Where the other owner is a spouse or civil partner, the related property rules generally mean no such discount applies.
The precise valuation will depend on the ownership arrangements and circumstances.
Joint bank accounts, property and investments should therefore be reviewed carefully rather than automatically excluded from the estate.
The treatment of pensions and life insurance depends on the arrangements involved.
Some life insurance proceeds may form part of the estate, while policies written under an appropriate trust may fall outside it.
Pension death benefits have historically often fallen outside the estate for Inheritance Tax purposes, particularly where pension scheme trustees have discretion over payment.
However, the rules are changing.
From 6 April 2027, most unused pension funds and pension death benefits will be brought within the estate for Inheritance Tax purposes. Certain benefits, including death-in-service benefits from registered pension schemes, will remain excluded.
Personal representatives will be responsible for reporting and paying any Inheritance Tax due on unused pension funds. Where the relevant conditions are met, they will also be able to direct the pension scheme administrator to withhold funds and pay the tax directly to HMRC.
These changes apply to deaths occurring on or after 6 April 2027.
Executors should therefore establish the type of pension or insurance arrangement involved and obtain the relevant information from the provider.
Trust assets may also need to be included where the deceased had a qualifying beneficial interest. This is a technical area where professional advice is often needed.
Lifetime gifts can have a significant impact on the Inheritance Tax calculation.
Under the Inheritance Tax 7-year rule, many gifts made to individuals become exempt if the person making the gift survives for at least seven years.
However, gifts made within seven years before death may need to be considered when calculating the available nil-rate band and any Inheritance Tax liability.
Executors should establish when gifts were made, their value and whether any exemptions apply.
The annual gift exemption allows individuals to give away up to £3,000 per tax year, with unused allowance generally available to carry forward for one tax year.
Other exemptions may apply to small gifts, wedding gifts and regular gifts from surplus income.
Gifts with reservation of benefit also require attention. For example, someone who gives their home to their children but continues living there rent-free may still have the property's value included in their estate.
For a more detailed explanation, see our guide to the Inheritance Tax 7-Year Rule.
Once the assets have been valued, executors need to identify the deceased's outstanding debts and liabilities.
These may include mortgages, personal loans, credit card balances, overdrafts, unpaid household bills and other debts owed at the date of death.
Reasonable funeral expenses can also generally be deducted when calculating the estate's net value.
However, not every expense is deductible for Inheritance Tax purposes.
For example, probate application fees, estate administration costs and many expenses arising after death cannot simply be deducted from the estate's date-of-death value for IHT purposes.
Executors should therefore distinguish between liabilities deductible for Inheritance Tax and expenses that must be paid during the wider estate administration.
Where debts are substantial, unusual or connected to trusts or family members, advice may be necessary.
Understanding the distinction between gross and net estate value is important.
The gross estate value is broadly the total value of the relevant assets before debts and liabilities are deducted.
The net estate value is calculated after deducting allowable debts and liabilities.
Further calculations may then be needed to establish the amount chargeable to Inheritance Tax, after applying exemptions, reliefs and available allowances.
These figures are not necessarily the same as the amounts used for probate administration, particularly where jointly owned assets, trusts or lifetime gifts are involved.
The standard Inheritance Tax nil-rate band is £325,000 per person, and is frozen until 5 April 2031.
There is also an additional residence nil-rate band of up to £175,000, which may apply when a qualifying home passes to direct descendants, such as children or grandchildren.
This can increase an individual's available tax-free threshold to £500,000 where all the relevant conditions are met.
For married couples and civil partners, unused allowances may be transferable following the first death. This means a surviving spouse or civil partner's estate may potentially benefit from combined allowances of up to £1 million.
However, the residence nil-rate band cannot exceed the value of the qualifying home interest and begins to reduce where the net estate exceeds £2 million. It is reduced by £1 for every £2 above that threshold.
A downsizing addition may also be available where someone sold, gave away or moved to a less valuable home before death. This can preserve some or all of the residence nil-rate band, provided the relevant conditions are met, including leaving sufficient qualifying assets to direct descendants.
The standard Inheritance Tax rate is 40% on the taxable value above the available allowances. A reduced rate of 36% may apply where sufficient qualifying charitable gifts are made.
Some business and agricultural assets may qualify for Inheritance Tax relief.
These reliefs can reduce the taxable value of qualifying assets, although the assets must still be valued correctly.
From 6 April 2026, a combined allowance of £2.5 million applies to qualifying agricultural and business property eligible for 100% relief.
Above that allowance, qualifying property generally receives 50% relief, subject to the relevant conditions.
Unused allowance may also be transferable between spouses and civil partners.
Certain shares, including qualifying AIM shares, generally receive 50% Business Property Relief rather than 100% under the new rules. These shares do not use up the £2.5 million allowance available for assets qualifying for 100% relief.
Estates containing farms, private businesses or substantial shareholdings may require detailed valuation and tax advice.
Once the assets and liabilities have been established, executors can calculate the estate's potential Inheritance Tax liability.
For example, imagine an estate with the following values:
- Property, savings and investments: £700,000
- Allowable debts and funeral expenses: £25,000
- Net estate value: £675,000
Assume the deceased leaves a qualifying home worth at least £175,000 to their children, has made no relevant lifetime gifts and is entitled to both the full nil-rate band and residence nil-rate band.
The available tax-free threshold would be £500,000.
This leaves £175,000 potentially subject to Inheritance Tax.
At the standard rate of 40%, the tax payable would be £70,000.
This is a simplified example. The actual calculation may differ where there are lifetime gifts, transferable allowances, trusts, business assets, charitable gifts or other reliefs.
Not every estate requires a full Inheritance Tax account.
Many estates qualify as excepted estates, meaning the personal representatives do not usually need to send full Inheritance Tax details to HMRC. However, they must still provide the required estate values as part of a probate application.
A full IHT400 may be required where Inheritance Tax is payable or where the estate falls outside the excepted estate rules.
For example, specified lifetime transfers exceeding £250,000 in the seven years before death can require full reporting, even where no Inheritance Tax is ultimately due. Other factors include significant foreign assets, certain trust interests and gifts with reservation of benefit.
Where an IHT400 is required, it must generally be submitted within twelve months from the end of the month in which the person died, subject to the applicable filing rules.
HMRC advises personal representatives to allow around 20 working days after submitting the IHT400 and making any required tax payment before applying for probate. HMRC then issues a unique code confirming that sufficient tax has been paid or accounted for, which is needed for the probate application.
Executors should avoid assuming that an estate requires no detailed reporting simply because no tax is expected.
Inheritance Tax is generally due by the end of the sixth month after the month in which the person died.
For example, if someone dies in January, the tax payment deadline is normally 31 July.
Interest may be charged where the tax remains unpaid after the deadline.
Where tax is payable, executors will usually need to pay some or all of the tax due, or make appropriate payment arrangements, before probate can be granted.
Certain assets, including property and qualifying business or agricultural assets, may be eligible for payment by annual instalments.
For qualifying agricultural and business property, the instalment rules introduced in April 2026 allow payment over ten years without interest on the outstanding balance, provided instalments are paid on time.
These arrangements can help where estates have substantial assets but limited available cash.
One common mistake is using the value of an asset when it is sold rather than its value at the date of death.
Another is overlooking jointly owned assets, lifetime gifts or valuable personal possessions.
Executors may also assume that ISAs are exempt from Inheritance Tax or that all pension benefits should be treated in the same way.
Property valuations can create difficulties where executors rely on informal estimates that do not reflect the property's actual market value.
Incorrect deductions are another issue. Not every cost incurred during estate administration can be deducted for Inheritance Tax purposes.
Finally, executors sometimes overlook available allowances or reliefs, which could result in unnecessary tax being paid.
Accurate records and early professional advice can help prevent these mistakes.
It is possible to value a straightforward estate without a solicitor.
However, professional assistance can be particularly valuable where the estate contains property, investments, business assets, trusts, foreign assets or substantial lifetime gifts.
A solicitor can help identify which assets need to be included, determine whether professional valuations are required, establish allowable liabilities and ensure relevant exemptions and reliefs are considered.
They can also assist with preparing the IHT400 where required, corresponding with HMRC and progressing the probate application.
Executors carry personal responsibility for administering an estate properly, so obtaining advice can help reduce the risk of mistakes and delays.
Valuing an estate for Inheritance Tax is an important part of probate and estate administration.
The process involves identifying the deceased's assets, establishing their value at the date of death, reviewing lifetime gifts, deducting allowable liabilities and applying the relevant Inheritance Tax allowances and reliefs.
Even where no Inheritance Tax is payable, accurate estate values may still be needed for probate.
Property, investments, trusts, business interests and lifetime gifts can make the calculation more complicated, and incorrect reporting may lead to delays or HMRC enquiries.
Taking a careful, structured approach from the beginning can help executors fulfil their responsibilities and ensure the estate is administered correctly.
At Premier Solicitors, our probate and estate administration team provides clear, practical advice to executors, administrators and families dealing with the valuation of an estate.
We can help identify and value assets, establish liabilities, review Inheritance Tax allowances and reliefs, prepare the necessary reporting and guide you through the probate process.
We also assist with more complex estates involving property, trusts, business interests, agricultural assets, overseas assets and lifetime gifts.
Whether you need help calculating an estate's value or managing the wider administration process, our team can provide guidance tailored to your circumstances.
For advice on estate valuations, Inheritance Tax or probate, contact Premier Solicitors today on 01234 358 080 or submit an enquiry through our contact page.
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