Why the date of death rule matters more than anything else
There is one principle underneath the whole exercise, and almost every mistake executors make is a version of forgetting it. Everything is valued at its open market value on the date of death. Not the date you applied for probate. Not the date the grant arrived. Not the price the asset eventually sold for.
Open market value means the price the asset would reasonably fetch if sold on the open market on that day, between a willing buyer and a willing seller, neither under pressure. That definition does a lot of work. It rules out insurance replacement values, which are almost always far higher than resale values. It rules out the optimistic number an estate agent quotes when pitching for an instruction. And it rules out the sentimental figure the family has in mind for a piece of furniture nobody would actually pay for.
The gap between date of death and completion is where the confusion sets in. Probate commonly takes six to twelve months from death to distribution, and markets move. If a house is correctly valued at £385,000 at the date of death and sells for £410,000 nine months later, the estate is still assessed on £385,000 for inheritance tax. The £25,000 uplift is a gain in the hands of the estate and may attract capital gains tax instead - a different tax, with a different rate and a different set of allowances.
When you write to a bank, building society, NS&I, insurer or share registrar, ask specifically for a "date of death valuation". It is the standard term and every bereavement team understands it. Ask them to confirm the balance including interest accrued to the date of death, because interest credited up to that day forms part of the estate and interest afterwards does not.
Get everything in writing and keep it. If HMRC opens an enquiry two or three years later, the letters are your evidence that you took reasonable care - which is the difference between no penalty and a penalty.
Which reporting route applies to your estate
The valuation determines the paperwork, so it is worth knowing the destination before you start. For deaths on or after 1 January 2022 the system splits in two.
- 1 No inheritance tax is due and the estate meets the excepted estate conditions→ Most non-taxable estates are "excepted estates". You report reduced information as part of the probate application itself rather than filing a full inheritance tax return. This covers estates below the £325,000 threshold, estates up to £650,000 where an unused spousal threshold is transferred, and estates left entirely to a UK-domiciled spouse, civil partner or qualifying charity.
- 2 Inheritance tax is due on the estate→ You must complete form IHT400 and the relevant supplementary schedules, and report within twelve months of the death. HMRC needs roughly 20 working days after receiving the IHT400 before the grant can be issued, so build that into your timeline. Tax is due by the end of the sixth month after death to avoid interest.
- 3 The estate exceeds one of the excepted estate limits despite no tax being due→ Certain features force a full IHT400 even where no tax is payable - gifts of more than £250,000 in the seven years before death, an estate over £3 million, foreign assets over £100,000, or trust assets over £250,000. Check these before assuming the simpler route applies.
- 4 You are not sure which side of the line the estate falls→ This is precisely the situation for professional advice. An estate valued near £325,000 can move across the threshold on a single property valuation, and getting the route wrong wastes months. A solicitor or STEP practitioner will confirm the position for a fraction of a percentage-based administration fee.
The court fee is separate from all of this and depends only on size: £526 for estates over £5,000, and nothing at or below that. It rose from £300 on 13 July 2026, so older guides still quote the wrong figure. Our probate cost calculator compares what the whole administration should cost by route.
The asset-by-asset walkthrough
Work through these in order. The discipline that matters is not speed but completeness - an asset you miss is an asset you may have to go back and correct later, and corrective disclosures are where penalties start.
Property
Almost always the largest item, and the one HMRC looks at hardest. Get at least one estate agent valuation and preferably three, asking each in writing for a probate valuation rather than a marketing appraisal. Agents pitching for an instruction quote optimistically by instinct; you want a defensible figure, not a flattering one. Take the average of three and keep all three letters.
Where the estate is anywhere near the inheritance tax threshold, where the property is unusual (a listed building, agricultural land, something with development potential, a flat with a short lease), or where beneficiaries might disagree with each other, pay a few hundred pounds for a formal RICS "Red Book" valuation. It gives you a professionally signed figure that HMRC's District Valuer will find much harder to move.
Where the deceased owned a share of a property with someone other than a spouse or civil partner - a sibling, an adult child, a business partner - a discount may apply to the value of their share, commonly cited at around 10%. The logic is real: a half share in a house that someone else lives in is genuinely harder to sell than half the vacant possession value.
But the discount is not automatic, the appropriate percentage depends on the facts, and no discount applies between spouses or civil partners under the related property rules. This is a point to take advice on rather than assume. Claiming a discount you are not entitled to is exactly the kind of thing that turns into a careless-behaviour penalty.
Bank and building society accounts
Write to every institution the deceased held money with and ask for the balance at the date of death, including interest accrued to that date. Do not use the last statement before death, and do not use the balance on the day you happen to look. Include current accounts, savings accounts, cash ISAs, fixed-term bonds and any account with a nominal balance that has been forgotten about. If an account is overdrawn, that is a debt to deduct, not an asset to ignore.
NS&I products
Premium Bonds, Income Bonds, savings certificates and Direct Saver accounts all form part of the estate. NS&I has a dedicated bereavement process and will confirm the total holding. Premium Bonds stay in the draw for twelve months after death, so any prize won during that period belongs to the estate - though only prizes won up to the date of death count towards the date-of-death valuation.
Quoted shares - the quarter-up rule
Shares listed on a recognised stock exchange are valued using the quarter-up rule: take the closing prices on the date of death, then take the lower price plus one quarter of the difference between the lower and higher figures.
4.12p + (4.28p − 4.12p) ÷ 4 = 4.16p per share. If the person died at a weekend or on a bank holiday, you may use the closing prices from either the trading day before or the trading day after - whichever gives the result you prefer.
Investment funds and ISAs
Unit trusts and open-ended investment companies are more straightforward than shares: ask the fund manager for the bid price at the date of death and multiply by the units held. Stocks and shares ISAs are valued the same way - and remember that the ISA wrapper does not exempt anything from inheritance tax. ISAs are free of income tax and capital gains tax during life, but they sit squarely inside the estate on death.
Life insurance policies
The treatment turns entirely on one question: was the policy written in trust?
- Not in trust - the sum assured is paid to the estate, forms part of the estate, and counts towards inheritance tax. Include the full payout.
- Written in trust - the proceeds are paid directly to the named beneficiaries, fall outside the estate, and do not count for inheritance tax. They also do not need probate to be released, which is often the fastest source of cash for a family in the weeks after a death.
Check the paperwork rather than assuming. A policy the deceased always described as "for the children" may or may not have been formally placed in trust, and the difference on a £200,000 policy in a taxable estate is £80,000 of inheritance tax.
Pensions - and the April 2027 change
Under the rules as they currently stand, unused defined-contribution pension pots sit outside the estate for inheritance tax. Do not include them in the valuation for a death before 6 April 2027, though you should still contact the scheme, because there may be a death benefit payable to nominated beneficiaries and a discretionary lump sum decision for the trustees to make.
The 2024 Autumn Budget confirmed that from 6 April 2027, unused pension funds and most lump-sum death benefits will fall within the estate for inheritance tax purposes, with exemptions where they pass to a spouse, civil partner or registered charity.
For anyone valuing an estate from that date this becomes a major new line. An unused £250,000 pot added to an estate that has already used its nil-rate bands adds £100,000 to the inheritance tax bill - and where the member died after 75, the beneficiaries pay income tax on withdrawals on top. See our guide to inheritance tax on pensions for the detail and the planning responses.
Chattels and personal possessions
"Chattels" means personal possessions - furniture, clothing, cars, jewellery, art, antiques, collections, tools, musical instruments. This is the second most commonly challenged category after property, and the reason is a persistent misunderstanding about which value applies.
You value chattels at what they would realistically fetch on the open market, which is normally far below the insurance or replacement value. A dining suite insured for £3,000 might raise £120 at a house clearance sale, and £120 is the correct figure. Most ordinary household contents come to somewhere between £1,000 and £5,000 in total, and HMRC does not expect an inventory of every kitchen drawer.
What it does expect is proper attention to anything genuinely valuable. Get a specialist or auction house valuation for:
- Any single item plausibly worth more than about £1,500 to £2,000
- Jewellery of any real substance, including inherited pieces
- Art, antiques and anything by a named maker
- Collections - stamps, coins, wine, classic cars, militaria
- Firearms, and anything with an unusual or specialist market
Cars are valued at trade guide value for the mileage and condition, not the forecourt asking price. Auction houses will usually give a free probate valuation for items they might later be instructed to sell, which makes this cheaper than executors expect.
Business and agricultural interests
A share in a trading business, a partnership interest or agricultural land needs a specialist valuation, and may qualify for business property relief or agricultural property relief. These reliefs have been subject to significant reform and the rules are genuinely technical. Do not attempt this without professional advice - the amounts at stake are usually large and the conditions unforgiving.
Foreign assets
A holiday home in Spain, a bank account in Ireland, an inherited plot in Cyprus - all form part of the estate of someone UK-domiciled, wherever they sit. Value them in local currency at the date of death and convert at the exchange rate on that date. Foreign assets over £100,000 push the estate out of the excepted estate route and into a full IHT400. There may also be a succession process in the other country running in parallel, and double taxation relief may be available.
Digital assets
Increasingly the category executors overlook entirely. Cryptocurrency holdings are property and must be valued at the date of death - and are almost impossible to recover without the keys, so locate them early. Also consider domain names, monetised online accounts, a business built on a platform, credit balances with online retailers, and loyalty or reward point schemes. Photographs, music libraries and e-books are usually licensed rather than owned and typically have no transferable value at all.
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What you can deduct from the estate
Once the assets are totalled, you deduct the liabilities. The rule is that the debt must have been genuinely owed at the date of death, plus reasonable funeral expenses.
| Deductible | Not deductible |
|---|---|
| Outstanding mortgage or secured loan | The probate court fee itself |
| Credit cards, store cards, personal loans, overdrafts | Estate agent and conveyancing fees on a later sale |
| Final utility bills and council tax to the date of death | House clearance and property maintenance after death |
| Income tax owed to HMRC for the period to death | Your own time and expenses as executor |
| Reasonable funeral costs, including a headstone | Wake and reception costs beyond the reasonable funeral |
| Care home fees outstanding at the date of death | Informal family loans with no supporting evidence |
Gifts are not deductions, but they belong in the same conversation because they can be pulled back into the calculation. Gifts made in the seven years before death may be brought into account against the nil-rate band. The £3,000 annual exemption, small gifts, wedding gifts and genuinely regular gifts out of surplus income are excluded.
Where gifts above the nil-rate band were made between three and seven years before death, taper relief reduces the tax charged on those gifts on a sliding scale. Note carefully that taper relief reduces the tax on the gift, not the value of the gift itself - a distinction that catches out a great many people reading about it for the first time. You will need to reconstruct the gift history from bank statements, and gifts over £250,000 in the seven-year period force a full IHT400.
Worked example: valuing the Whitmore estate
Margaret Whitmore died in March 2026, a widow, leaving her estate to her two adult children. Her husband David died in 2011 leaving everything to her, so none of his nil-rate bands were used and both transfer to her estate in full. Here is what her executor - her daughter - actually had to assemble.
| Asset | Date-of-death value | How it was valued |
|---|---|---|
| Family home (sole name) | £385,000 | Average of three estate agent appraisals, confirmed by a RICS Red Book report |
| Current account | £4,820 | Date-of-death balance confirmed in writing by the bank |
| Cash ISA | £46,300 | Date-of-death balance including interest accrued to that date |
| Building society savings | £28,140 | Date-of-death balance plus £96 accrued interest |
| NS&I Premium Bonds | £12,000 | Holding confirmed by NS&I, plus any prize won in the month of death |
| Quoted shares (utility and bank holdings) | £31,450 | Quarter-up rule applied to closing prices on the date of death |
| Stocks and shares ISA | £22,780 | Provider valuation at the date of death |
| Car | £6,400 | Trade guide value for the mileage and condition, not the forecourt price |
| Personal possessions and house contents | £3,500 | Realistic open market value - what the contents would fetch at auction |
| Jewellery (including an inherited ring) | £9,200 | Specialist valuation obtained because two items exceeded £2,000 |
| Life policy not written in trust | £40,000 | Sum assured payable to the estate - a policy in trust would fall outside |
| Gross estate | £589,590 | Before any deductions |
| Liability | Amount | Basis |
|---|---|---|
| Outstanding mortgage | −£61,000 | Redemption figure from the lender as at the date of death |
| Credit card and store card balances | −£3,410 | Balances outstanding at death, not payments made afterwards |
| Final utility and council tax bills | −£890 | Amounts owed to the date of death |
| Funeral costs | −£5,200 | Reasonable funeral expenses, including a headstone |
| Total deductions | −£70,500 | All evidenced in writing |
| Net estate | £519,090 | The figure tested against the nil-rate bands |
Testing the valuation against the thresholds
A net estate of £519,090 is well above the £325,000 nil-rate band on its own. This is the moment most executors panic - and the moment the transferable bands do their work.
| Step | Amount | Why |
|---|---|---|
| Net estate | £519,090 | Assets less debts and funeral costs |
| Margaret's nil-rate band | −£325,000 | Standard allowance, frozen through 2027/28 |
| David's transferred nil-rate band | −£325,000 | Unused on his death in 2011, claimed on form IHT402 |
| Margaret's residence nil-rate band | −£175,000 | Home passing to her children as direct descendants |
| David's transferred residence nil-rate band | −£175,000 | Claimed on form IHT436; no taper below £2m |
| Total allowances available | £1,000,000 | Two full sets of bands - the £1m a widowed estate can shelter |
| Taxable estate | £0 | Net estate less allowances |
| Inheritance tax due at 40% | £0 | Nothing to pay - the estate is fully covered |
No inheritance tax. But look at what would have happened if Margaret had never married, or if David's bands had been used up on his death in 2011. With only her own £500,000 of allowances, the same estate would have had £19,090 exposed to tax and a bill of £7,636. Identical assets, identical valuations, a completely different outcome - which is why claiming the transferred bands is not optional bookkeeping but the single most valuable thing an executor of a widowed estate does.
Run your own figures through our inheritance tax calculator, which handles the residence band taper above £2 million, the charity reduced rate, and the April 2027 pension change.
Margaret's estate had a large margin because two full sets of bands were available. Take those away and the picture changes completely. On her own £500,000 of allowances the estate is already £19,090 into taxable territory - and every extra £1,000 on the house valuation adds £400 to the bill. A £75,000 difference in a single property valuation is entirely plausible between an optimistic agent's appraisal and a conservative one, and on an estate sitting at the threshold that is £30,000 of tax turning on one letter.
This cuts both ways. Understate the property and you face a District Valuer challenge, extra tax, interest and a possible penalty. Overstate it and the estate pays tax it never owed. An estate within roughly 15% of its available allowances in either direction is an estate that should be paying for a RICS Red Book valuation and an hour of a solicitor's time. It is the cheapest insurance in the whole process.
When you genuinely need a professional valuation
Not every estate needs professional help, and paying a percentage of the estate for straightforward work is the biggest avoidable cost in probate. But there are situations where doing it yourself is a false economy:
- The estate is anywhere near the inheritance tax threshold. A RICS Red Book valuation costs a few hundred pounds and can save tens of thousands in disputed tax.
- The property is unusual - listed, agricultural, with development potential, a short lease, a sitting tenant, or in poor condition.
- There are valuable chattels - art, antiques, jewellery, collections. Auction houses often provide probate valuations free.
- There is a business or agricultural interest, where business property relief or agricultural property relief may apply.
- There are unquoted shares in a private company, which have no market price and require a formal valuation methodology.
- There are significant foreign assets, particularly where another country's succession process runs in parallel.
- Beneficiaries disagree, or a claim against the estate looks possible. An independent valuation removes the argument.
- A jointly owned property discount is in play, where the percentage claimed needs to be defensible.
You do not have to hand over the whole administration to get help on the difficult part. Buying an hour of a solicitor's or STEP practitioner's time on the one point you are unsure about is usually far cheaper than a percentage-based fee on the entire estate. See applying for probate for how the DIY route works alongside targeted professional help.
How HMRC checks your figures - and what happens if you get it wrong
HMRC does not accept probate valuations on trust. It has a specialist function, the Valuation Office Agency's District Valuer, which reviews property figures reported on IHT400 forms, and it compares reported values against sale prices, Land Registry records and comparable transactions. Chattels get scrutinised too, particularly where a high-value item appears in a later auction catalogue at a multiple of the probate figure.
Where HMRC concludes the estate was undervalued, it can revise the figures, charge the extra tax, add interest running from the original due date, and impose a penalty. Penalties are set by reference to behaviour:
| Behaviour | Maximum penalty | What it looks like in practice |
|---|---|---|
| Reasonable care taken | No penalty | Professional valuations obtained, working documented, error genuine |
| Careless | Up to 30% of the extra tax | A guessed property figure, contents valued at nothing, an account overlooked |
| Deliberate | Up to 70% of the extra tax | Knowingly reporting a figure below what you believed the asset was worth |
| Deliberate and concealed | Up to 100% of the extra tax | Hiding an asset, or creating documents to support a false figure |
This is the part executors most often fail to appreciate until it is too late. If HMRC revises the valuation after the estate has been distributed, you are the person it pursues - not the beneficiaries who have already spent their inheritance on a car or a deposit. Recovering money from family members who have spent it is, in practice, extremely difficult.
Three protections are worth knowing. First, get professional valuations where the numbers matter and keep the evidence - it is what establishes reasonable care. Second, place a section 27 notice under the Trustee Act 1925 in The Gazette and a local paper before distributing, which protects you against unknown creditors. Third, do not distribute early: the conventional advice is to wait at least six months from the grant, because that is the window for claims under the Inheritance (Provision for Family and Dependants) Act 1975. See executor duties for the full picture of what you are taking on.
If assets later sell for less than the probate value
Because the valuation is fixed at the date of death, an estate can end up paying inheritance tax on a value it never actually realises. Two reliefs exist for exactly this problem, and both are routinely missed.
Where land or property is sold within four years of the death for less than the probate value, the executors can claim to substitute the actual sale price. The sale generally needs to be at arm's length, and all qualifying sales in the period are aggregated - so you cannot claim the losses and ignore the gains.
A parallel relief for quoted shares and unit trusts sold within twelve months of the death at a loss. Again all qualifying sales in the period are pooled, and a sale to a beneficiary or connected person can disqualify the claim entirely.
Both reliefs matter most in a falling market and both are easy to overlook, because by the time the sale completes the inheritance tax has usually been paid and the executor has mentally closed the file. If a property or share portfolio sells below its probate value within the relevant window, raise it explicitly with your solicitor or check the position yourself. The claim has to be made - HMRC does not volunteer it.
Three executors, three valuation problems
Situation: A three-bedroom semi, modest savings, and a garage full of tools and motorcycle parts. Priya thought the estate was comfortably under the threshold.
Priya took one estate agent appraisal for the house at £290,000 and valued the garage contents at £500 - "just old junk". Her father had been widowed, so his estate had two nil-rate bands and two residence bands available and she was confident there was nothing to pay.
Then a specialist buyer offered £34,000 for two partly restored motorcycles she had assumed were scrap. The estate was still well within its allowances, so no inheritance tax became payable - but the incident changed how she approached the rest of the job. She went back and got two more agent appraisals (which averaged £305,000, not £290,000), had the remaining garage contents assessed by an auction house, and corrected the figures before submitting.
The lesson: Priya's estate had enough headroom to absorb the error. Plenty do not. Had her father not been widowed, the same £34,000 discovery would have sat squarely in taxable territory at 40%. You cannot know whether a chattel matters until you know what it is worth, and "old junk" is a judgement about appearance, not value.
Situation: A cottage with a paddock and outline planning interest from a neighbouring developer. His aunt never married and left everything to her nieces and nephews.
The estate agent valued the cottage at £420,000. With no spouse, Daniel's aunt had only her own £325,000 nil-rate band - and no residence nil-rate band at all, because nieces and nephews are not direct descendants. The estate was clearly taxable and Daniel filed an IHT400.
HMRC referred the property to the District Valuer, who noted the neighbouring developer's interest in the paddock and assessed the property at £505,000 - development potential ("hope value") that the residential appraisal had not reflected. That is £85,000 more in the taxable estate and £34,000 more in inheritance tax, plus interest from the original due date.
Because Daniel had relied on a single residential agent appraisal rather than a RICS valuation of a property with an obvious unusual feature, HMRC's initial view was that he had not taken reasonable care. He engaged a chartered surveyor, who negotiated the District Valuer down to £478,000 and evidenced that the residential valuation had been reasonable on the information available. The penalty was not pursued.
The lesson: unusual property features - land, planning potential, listing, short leases - are exactly where a residential agent's appraisal is not enough. And the absence of a spouse or direct descendants can halve the available allowances, which makes the valuation matter far more.
Situation: A straightforward estate on paper - a house in joint names, a shared bank account, and a life policy she thought was in trust.
Eleanor's situation was simpler than it looked in one respect and harder in another. The house and the current account were held as joint tenants, so both passed to her automatically by survivorship, outside the estate. Everything passing to a surviving spouse is exempt from inheritance tax in any event.
The complication was the life policy. Her husband had always described it as being "set up for Eleanor", but when she checked the paperwork it had never been written into trust. The £180,000 sum assured was therefore paid into the estate rather than directly to her. Because she was the sole beneficiary and spouse exemption applied, there was still no tax - but the money took months longer to reach her than it would have done under a trust, and it needed the grant to release it.
The lesson: check the trust position on every policy rather than relying on what anyone remembers being told. In an estate passing to a spouse the cost is delay; in an estate passing to children, the same oversight on a £180,000 policy in a fully used estate would have been £72,000 of inheritance tax that a trust would have avoided entirely. It is one of the strongest arguments for reviewing policies while you can still do something about it.
A practical order of work
If you are starting from nothing, this is the sequence that saves the most repeated effort:
- Order several certified copies of the death certificate at registration - each institution wants to see one, and copies are cheaper at that point than later.
- Go through twelve months of bank statements and post. Standing orders, direct debits and annual statements are how you find the accounts, policies and holdings nobody mentioned.
- Write to every institution asking for a date-of-death valuation in writing. Send these all at once - responses take weeks and they run in parallel.
- Get property valuations underway early, since these take longest and determine whether you need a RICS report.
- Assess the chattels honestly, and book specialist valuations for anything of substance.
- Total the assets, deduct the debts, and test the net figure against the available nil-rate bands - including any transferable from a predeceased spouse.
- Decide the reporting route, then apply for the grant. If inheritance tax is due, allow roughly 20 working days after HMRC receives the IHT400 before the grant can issue.
- Keep every letter, valuation and calculation in one file. If HMRC asks in three years, that file is your defence.
If you are still working out whether a grant is needed at all, start with what is probate and the probate and estate hub, which has a free checker.
Frequently asked questions
- How do I value an estate for probate?
- You list everything the person owned at the date they died, value each item at its open market value on that exact date, then deduct their debts and reasonable funeral costs. Open market value means the price the asset would realistically fetch between a willing buyer and a willing seller - not an insurance replacement value, not a sentimental figure, and not the price it eventually sells for months later. Write to every bank, building society, NS&I, pension provider, insurer and share registrar asking for a date-of-death valuation in writing; they are used to the request and most have a bereavement team that handles it. Get at least one estate agent appraisal for any property, and a formal RICS valuation where the estate is anywhere near the £325,000 inheritance tax threshold. Keep every letter, valuation and calculation - HMRC can ask to see your working years later, and the executor is the person who has to produce it.
- What is the probate threshold in the UK?
- There are two different thresholds people mean by this, and confusing them is common. The probate court fee threshold is £5,000: estates worth more than that pay a £526 application fee in England and Wales, and estates of £5,000 or less pay nothing. Separately, banks and building societies each set their own "small estates" limit - typically between £5,000 and £50,000 - below which they will release funds on an indemnity form without a grant at all. Neither of these is the inheritance tax threshold, which is £325,000. And none of them determines whether you need probate: that depends on how the assets were owned. A £600,000 estate held entirely as joint tenants with a surviving spouse may need no grant, while a £40,000 estate with a house in the deceased's sole name will.
- What is the inheritance tax threshold in 2026?
- The nil-rate band is £325,000 per person and has been frozen at that level since 2009; it is currently fixed through to the end of 2027/28. On top of it, the residence nil-rate band gives up to a further £175,000 where a qualifying home passes to direct descendants - children, stepchildren, adopted children or grandchildren. That residence band tapers away by £1 for every £2 of estate above £2 million, so it is fully gone by £2.35 million. Both bands are transferable between spouses and civil partners, which is why a married couple can often pass on up to £1 million between them. Anything above the available allowances is taxed at 40%, reduced to 36% where at least 10% of the net estate goes to charity. Our inheritance tax calculator works this through on your own figures.
- Do I need probate if the estate is under £325,000?
- Quite possibly yes - the £325,000 figure is the inheritance tax threshold, not a probate threshold, and the two things are unrelated. An estate under £325,000 will usually have no inheritance tax to pay, which makes the paperwork far simpler, but you may still need a grant of probate to deal with the assets. The trigger is ownership: if the deceased owned property in their sole name or a share as tenants in common, the Land Registry will not transfer or sell it without a grant, whatever the estate is worth. Directly held shares almost always need one too. What being under the threshold does change is the reporting route - for deaths on or after 1 January 2022 most non-taxable estates are "excepted estates" and report reduced information within the probate application itself, rather than filing a full IHT400 return.
- What is a date of death valuation and why does it matter?
- It is the value of each asset on the day the person died, and it is the only date that counts for inheritance tax. Not the date you applied for probate, not the date the grant came through, and not the date the asset was eventually sold. This catches executors out constantly, because probate frequently takes six to twelve months and markets move in that time. If the house is valued at £385,000 at the date of death and sells for £410,000 nine months later, the estate is still assessed on £385,000 for inheritance tax - though the £25,000 gain may attract capital gains tax on the estate. It cuts the other way too: if it sells for less, you may be able to claim inheritance tax loss relief. Ask every institution explicitly for a "date of death valuation" and they will know precisely what you mean.
- How do I value a house for probate?
- Start with at least one estate agent appraisal, and preferably three, taken as an average. Ask the agents in writing for a probate valuation rather than a marketing appraisal, because agents naturally quote optimistically when they are pitching for an instruction and you want a defensible figure rather than a flattering one. Where the estate is near the inheritance tax threshold, where the property is unusual, or where there is any prospect of a dispute between beneficiaries, pay for a formal RICS "Red Book" valuation instead. It costs a few hundred pounds and gives you a professionally signed figure that HMRC's District Valuer will find much harder to challenge. Property is the asset class HMRC scrutinises most closely, precisely because it is the largest item in most estates and the most subjective to value.
- How are shares valued for probate?
- Quoted shares are valued using the "quarter-up" rule. You take the closing prices on the date of death, find the lower and higher of the quoted range, and take the lower price plus one quarter of the difference between the two. So a share quoted at 412p to 428p is valued at 416p - the lower figure plus a quarter of the 16p spread. Multiply by the number of shares held. If the person died at a weekend or on a bank holiday you can use the closing prices from either the trading day before or the one after, whichever you prefer. Unit trusts and open-ended investment funds are simpler: ask the fund manager for the bid price on the date of death. Unquoted shares in a private company are genuinely difficult and warrant a specialist valuation - they are also where business property relief may apply.
- What are chattels and how do I value them for probate?
- Chattels are personal possessions - furniture, clothes, cars, jewellery, art, antiques, collections, tools. Value them at what they would realistically fetch on the open market, which is usually far less than the insurance or replacement value. A three-piece suite insured for £3,000 might raise £150 at a house clearance sale, and £150 is the right figure. Most ordinary household contents come to a few thousand pounds in total, and HMRC does not expect an itemised list of every saucepan. What it does expect is proper attention to anything genuinely valuable: individual items worth more than a couple of thousand pounds, plus jewellery, art, antiques and collections of any real substance, should have a specialist or auction house valuation. Undervaluing a painting or a jewellery collection is one of the more common ways executors end up facing a penalty.
- What can I deduct from the estate value?
- Debts the person genuinely owed at the date of death, and reasonable funeral expenses. That means the outstanding mortgage or secured loan on any property, credit card and store card balances, personal loans, overdrafts, final utility bills, outstanding council tax, and any income tax owed to HMRC for the period to the date of death. Funeral costs are deductible including a reasonable headstone. What you cannot deduct is anything incurred after death that is not a funeral expense - the cost of clearing the house, estate agent fees on the sale, your own expenses as executor, or the probate fee itself. You also cannot deduct a debt that has effectively been forgiven, or informal family loans without evidence. Keep the paperwork for every deduction, because deductions reduce the tax and are exactly what HMRC will want to see substantiated.
- What happens if I undervalue an estate for probate?
- HMRC can open an enquiry, revise the figures, charge the additional inheritance tax with interest running from the original due date, and impose a penalty on top. Penalties are based on behaviour: a genuine mistake made despite taking reasonable care attracts none, careless undervaluation can cost up to 30% of the extra tax, deliberate undervaluation up to 70%, and deliberate undervaluation with concealment up to 100%. The critical point for executors is that this liability is personal. You are the one HMRC pursues, not the beneficiaries who have already spent their inheritance. Property is the most commonly challenged asset, referred to HMRC's District Valuer, followed by chattels. The defence is not optimism but evidence: get professional valuations where the figures matter, document how you arrived at each number, and take advice on anything genuinely uncertain.
- Can I claim inheritance tax back if the house sells for less?
- Yes, in defined circumstances. If land or property in the estate sells within four years of the death for less than the value reported for probate, the executors can claim inheritance tax loss relief on form IHT38, substituting the actual sale price for the probate value. A parallel relief exists for qualifying investments - broadly quoted shares and unit trusts - sold within twelve months of death at a loss, claimed on form IHT35. Both come with conditions: the sale generally has to be an arm's length sale, all qualifying sales in the period are aggregated so you cannot cherry-pick the losses, and a sale to a beneficiary or a connected person can disqualify the claim. These reliefs matter most in a falling market and are frequently missed, so raise them with your solicitor if a property sells below its probate value.
- Will pensions be included in the estate valuation?
- Not yet, but this changes soon. Under the rules as they stand, unused defined-contribution pension pots sit outside the estate for inheritance tax, which is why pensions have been such an effective way to pass wealth on. From 6 April 2027, following the 2024 Autumn Budget, unused pension funds and most lump-sum death benefits come into the estate for inheritance tax purposes, with exemptions where they pass to a spouse, civil partner or registered charity. For anyone valuing an estate after that date it becomes a substantial new line in the calculation - a £250,000 unused pot could add £100,000 to the inheritance tax bill of an estate that has already used its nil-rate bands. If you are valuing an estate now, exclude unused DC pensions but note them, because the executors of estates from April 2027 onwards will not have that luxury.
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Valuing an estate is a legal and tax exercise where the right answer depends on the specific facts, and executors can be personally liable for figures that turn out to be wrong. The thresholds and processes here were verified against GOV.UK in July 2026 and apply to England and Wales only - Scotland uses confirmation and Northern Ireland its own Probate Office, with different forms and procedures.
Where an estate is near the inheritance tax threshold, includes property with unusual features, holds business, agricultural, unquoted or foreign assets, or where a jointly owned property discount is in question, please take advice from a solicitor, a STEP practitioner or a chartered tax adviser before submitting figures to HMRC. The cost of an hour of advice is trivial against the cost of getting a valuation wrong. See our disclaimer.