Valuing the Estate

Before you can apply for probate, or work out whether Inheritance Tax is due, the estate needs to be valued. This means adding up everything the person owned at the date they died, then subtracting what they owed.

What Counts as Part of the Estate

Almost everything the person owned, in their sole name, needs to be included:

• Property and land
• Bank and building society accounts
• Savings, investments, and shares
• Pensions with a value payable to the estate
• Vehicles
• Personal possessions: furniture, jewellery, art, and collectibles
• Life insurance, but only if the policy wasn't written in trust, trust policies pass directly to named beneficiaries and sit outside the estate

Everything is valued at its open market value on the date of death, not today's value if that's different, and not a "quick sale" or discounted figure.

Jointly Held Assets Still Count

This surprises a lot of people: even though a jointly held bank account or a property held as joint tenants usually passes automatically to the surviving owner, the deceased's share still needs to be included in the estate valuation for Inheritance Tax purposes, even though no probate is needed to access it.

Deducting Debts

Once you have the total value of assets (the gross estate), you deduct what the person owed:

• Mortgages and loans
• Credit card balances
• Unpaid utility bills
• Funeral expenses, these are deducted first, before other debts

The figure left over is the net estate, and it's this figure that Inheritance Tax is calculated on if it applies.

Valuing Property and Possessions

For a straightforward residential property, three estate agent valuations are generally accepted. For higher value, complex, or disputed property, a professional RICS surveyor valuation is worth getting, since HMRC can challenge an undervaluation.

Everyday household items can usually be given a reasonable estimated value as a whole. Anything genuinely valuable, jewellery over £1,500, antiques, art, or collections, needs a professional valuation and must be listed separately on the Inheritance Tax form.

Gifts Made Before Death

Gifts of money or property worth over £3,000, given away in the 7 years before the person died, generally need to be included when working out Inheritance Tax. Gifts made more than 7 years before death are usually exempt.

Do You Need to Pay Inheritance Tax?

Inheritance Tax is due if the net estate is above the nil-rate band, currently £325,000, though this can be higher in some circumstances, for example if a main home is being passed to children or grandchildren. GOV.UK's guide to valuing an estate walks through the exact process for reporting the value and calculating any tax owed.

Most estates in the UK are what's called "excepted estates," meaning a simpler reporting process applies and the full IHT400 form isn't needed.

Frequently Asked Questions

Do I need to value the estate even if there's no Inheritance Tax to pay?

Yes. Even small, straightforward estates need a valuation to confirm whether tax is due and to support the probate application, it's the confirmation that no tax is owed, not the absence of a valuation, that matters.

How accurate does the valuation need to be?

As accurate as reasonably possible. HMRC can challenge undervaluations, sometimes years later, and penalties can apply, so it's worth keeping records of how you arrived at each figure.

What if I can't get exact figures for everything straight away?

You can use reasonable estimates where needed, particularly for property or shares, and update HMRC later if the figures change materially once things like a house sale go through.

Who actually does the valuation?

Usually the executor or administrator, though for anything complex, especially property near or above the tax threshold, it's common to bring in a solicitor or professional valuer to make sure the figures hold up.

Related reading: Checking for a Will After a Death · Claiming on Life Insurance After a Death