Estate Valuation for Probate: How to Value an Estate (UK)

At a glance

• Nil-rate band: the first £325,000 of an estate is normally free of Inheritance Tax, frozen at this level until April 2030.
• Residence nil-rate band: up to a further £175,000 tax-free where a home passes to children or grandchildren and the estate is worth less than £2 million — a combined threshold of up to £500,000.
• Transferable allowance: unused nil-rate band (and residence nil-rate band) from a deceased spouse or civil partner can transfer to the survivor's estate, potentially doubling the threshold to £1 million.
• Excepted estates: most estates qualify — broadly, no Inheritance Tax is due and none of the "full details" triggers apply (large gifts, trusts, foreign assets, and similar). No separate HMRC form is needed; the value is reported as part of the probate application itself.
• Full details required: form IHT400 (plus relevant supplementary forms) is needed if Inheritance Tax is due, or the estate does not qualify as excepted — for example, gifts over £250,000 in the 7 years before death, an estate worth over £3 million, or significant foreign assets.
• Deadline: if Inheritance Tax is due, the estate's value must be reported within 12 months of the death using IHT400, and the tax must normally be paid by the end of the sixth month after death to avoid interest.
• Gifts: count towards the estate if made in the 7 years before death; taper relief reduces the rate on gifts made 3 to 7 years before death.
• IHT205 is gone: for deaths on or after 1 January 2022, IHT205 was withdrawn — excepted estate information is now reported directly in the probate application.

What "valuing an estate" actually means

An estate valuation is a considered account of everything the deceased owned and owed at the moment of death. The resulting figure feeds two separate processes: the application for a grant of probate (or letters of administration, if there's no will) made to HM Courts and Tribunals Service, and the Inheritance Tax position reported to HMRC.

GOV.UK's guidance breaks this into three tasks: identify the assets and debts, estimate the estate's value, and then report that value in the correct way — which depends on whether the estate needs to send HMRC full details or qualifies for the simpler "excepted estate" route.

This is legal information, not legal advice. It explains the general position for estates in England and Wales and does not take account of your specific circumstances. Reading it does not create a solicitor–client relationship. LegalDocuments.co.uk is not a law firm and is not regulated by the Solicitors Regulation Authority. For advice on your own situation, speak to our telephone legal advice service or consult a regulated solicitor.

What counts towards the estate

GOV.UK lists the assets you need to value as at the date of death, including:

• the home, and any other property, buildings or land
• money in banks, building societies or ISAs, or cash held at home
• stocks and shares
• household and personal items — antiques, electrical goods, furniture, jewellery, paintings, stamp collections
• cars, caravans or boats
• foreign assets, such as property abroad
• cryptoassets (cryptocurrency)
• money owed to the deceased, such as unpaid wages or bill refunds
• payments triggered by the death, such as life insurance or a pension death benefit

You must include all assets in the estimate, even those left to a spouse, civil partner or charity that will not themselves be taxed — the full picture is needed to work out the overall position. For bank accounts, ISAs and pensions, you contact the institution directly for an exact balance as at the date of death. For chattels such as cars, jewellery and paintings, the test is the realistic price you'd get if you sold them — not what they cost to buy or replace. Checking prices for comparable items on online marketplaces is a reasonable way to arrive at a figure.

Debts are handled separately. GOV.UK is explicit that you should not include debts in the initial estimate of the estate's value — but you must tell HMRC about them if you go on to report the value formally. Typical debts include the mortgage, loans, credit cards, overdrafts, household bills, and amounts owed for goods or services (like a builder or accountant) that hadn't yet been paid at the date of death.

Valuing property

If the deceased owned a home or other land, it needs an open market valuation as at the date of death. For straightforward, lower-value property a written estate agent's figure is often sufficient. Where the property is unusual, high-value, or the estate is likely to be close to or above the tax threshold, a RICS-qualified surveyor's report is the safer route — HMRC can and does challenge figures it considers too low, and a professional valuation gives you defensible evidence if that happens.

Valuing joint assets

How a jointly owned asset is treated for the estate valuation depends on the way it was legally held. GOV.UK sets out the rules clearly on this point.

Joint tenants

Assets owned as joint tenants pass automatically to the surviving owner(s) — this is sometimes called the right of survivorship, and it happens regardless of what the will says. Even so, the deceased's notional share still has to be included in the Inheritance Tax valuation:

• Owned with a spouse or civil partner: divide the value of the asset by 2.
• Owned with others (for example, siblings or friends): divide the value by the number of owners, then deduct 10% from the deceased's share to reflect the practical difficulty of selling a part-share in an asset.

Worked example (from HMRC guidance): a property is jointly owned by 4 people (not spouses) and worth £200,000 on the date of death. Each share is £50,000 (£200,000 ÷ 4). After deducting 10% (£5,000), the deceased's taxable share is £45,000.

A joint bank account is normally divided by the number of account holders — unless the account was joint "for convenience only" (for example, an older person adding an adult child to help manage the account), in which case only the money the deceased actually owned is included.

Tenants in common

Assets owned as tenants in common do not pass automatically. Each owner holds a defined share, and that share passes under the will or the intestacy rules like any other asset. The valuation is simply based on the deceased's actual percentage share of the asset's value.

Getting this distinction right matters, because it changes both who inherits the asset and how the Inheritance Tax calculation treats it — check the Land Registry title or the original purchase paperwork if you are not sure which applies.

Working out the value of gifts

Lifetime gifts are one of the most commonly misunderstood parts of estate valuation. GOV.UK's guidance on gifts sets out the rules:

• Gifts made in the 7 years before death are brought back into the reckoning for Inheritance Tax.
• If the person survives 7 years after making a gift, no Inheritance Tax is due on it (the "7-year rule") — unless it was a gift into a trust, which has separate rules.
• Gifts made in the 3 years before death are taxed at the full 40% rate if tax is due on them.
• Gifts made 3 to 7 years before death benefit from taper relief, reducing the rate on a sliding scale:

| Years between gift and death | Rate of tax on the gift | |---|---| | Less than 3 years | 40% | | 3 to 4 years | 32% | | 4 to 5 years | 24% | | 5 to 6 years | 16% | | 6 to 7 years | 8% | | 7 or more years | 0% |

Taper relief only comes into play if the total value of gifts made in the 7 years before death exceeds the £325,000 nil-rate band.

Gifts that are exempt

Some gifts never count towards the estate value:

• gifts between spouses or civil partners (unlimited, provided both live in the UK)
• gifts to charities, political parties, and certain other exempt bodies
• the annual exemption — up to £3,000 of gifts per tax year (unused allowance can carry forward one year)
• the small gifts allowance — up to £250 per person per tax year, as long as no other allowance was used on the same person
• wedding or civil partnership gifts, up to set limits depending on the relationship
• "normal expenditure out of income" — regular payments, such as helping with a family member's living costs, made from surplus income

Gifts with reservation

If the deceased gave something away but kept benefiting from it — for example, gifting a house but continuing to live in it rent-free, or giving away a caravan but still using it for holidays — this is a "gift with reservation." It counts towards the value of the estate regardless of the normal 7-year rule, because in substance the deceased never really gave it up. GOV.UK explains gifts with reservation in detail and in the related guidance on working out Inheritance Tax due on gifts.

The Inheritance Tax threshold and reliefs

There's normally no Inheritance Tax to pay if either:

• the estate is below the £325,000 nil-rate band, or
• everything above that threshold is left to a spouse, civil partner, a qualifying charity, or a community amateur sports club

This threshold, and the related residence nil-rate band, are frozen at their current levels until April 2030.

The residence nil-rate band adds a further £175,000 where a home (or a share in one) passes to children — including adopted, fostered or step-children — or grandchildren, provided the estate is worth less than £2 million. Combined with the standard nil-rate band, this can raise the effective tax-free threshold to £500,000. Above £2 million, the residence nil-rate band tapers away.

Transferable allowance: if a person's estate does not use their full nil-rate band — most commonly because they left everything to a surviving spouse or civil partner — the unused percentage can be transferred to increase the survivor's threshold when they later die. Where none of the first spouse's threshold was used, this can raise the survivor's basic threshold to £650,000. GOV.UK sets out the calculation and worked examples. For deaths on or after 1 January 2022, this transfer is claimed as part of the probate application itself, rather than through a separate form.

Standard rate: Inheritance Tax is charged at 40% on the value of the estate above the available threshold. A reduced rate of 36% can apply if at least 10% of the estate's net value is left to charity.

Excepted estates: when full details aren't needed

Since 2022, most estates in England and Wales do not need to send HMRC a full account of every asset and debt. GOV.UK's guidance is explicit that most estates are "excepted estates."

An estate usually counts as excepted if any of the following apply:

• its value is below the current Inheritance Tax threshold
• the estate is worth £650,000 or less, and any unused threshold is being transferred from a spouse or civil partner who died first
• everything is left to a UK-resident spouse, civil partner or qualifying charity, and the estate is worth less than £3 million
• the deceased was a "foreign domiciliary" living permanently outside the UK, and their UK assets were worth £150,000 or less

If the estate is excepted, you still report its estimated value — but you do this as part of the probate application, with no separate return of full details to HMRC.

When full details are still required, even with no tax to pay

You must send HMRC full details of the estate — even if no Inheritance Tax is actually due — if the deceased, within 7 years of death:

• gave away more than £250,000 in gifts
• gave gifts and continued to benefit from them (gifts with reservation)
• left an estate worth more than £3 million
• was "deemed domiciled" in the UK
• had foreign assets worth more than £100,000
• was living permanently outside the UK but had previously lived here
• had a life insurance policy paying out to someone other than a spouse/civil partner, combined with an annuity
• had increased the value of a pension lump sum while terminally ill or in poor health
• had agreed that lifetime gifts would be treated as part of the estate rather than face a pre-owned asset charge

Similar "full details" triggers apply where trusts are involved — for example, gifts into trust, trust assets worth over £250,000, or more than one trust. GOV.UK sets out the trust-specific rules in full.

What happened to IHT205?

Before 1 January 2022, excepted estates were reported to HMRC using a paper form called IHT205 (with IHT217 used to transfer a spouse's unused nil-rate band). For deaths on or after 1 January 2022, both forms were withdrawn. The equivalent information for an excepted estate is now given directly within the probate application (forms PA1P if there's a will, or PA1A if there isn't) — there is no longer a separate HMRC return for a straightforward excepted estate. If the death occurred on or before 31 December 2021, the older IHT205/IHT217 rules still apply; GOV.UK maintains separate guidance for those cases.

When form IHT400 is needed

If Inheritance Tax is due, or the estate does not qualify as excepted for any of the reasons above, the personal representatives must complete the full Inheritance Tax account, form IHT400, supported by whichever of the numbered supplementary schedules apply — for example IHT402 (transferring unused nil-rate band), IHT403 (gifts), IHT404 (jointly owned assets), IHT405 (land, buildings and interests in land), IHT407 (household and personal goods), IHT411/412 (stocks and shares), IHT413 (business and partnership interests), or IHT435/436 (residence nil-rate band claims).

Deadline: the estate's value must be reported using IHT400 within 12 months of the death, and you cannot apply for probate until this has been done. Inheritance Tax itself must normally start being paid by the end of the sixth month after death to avoid interest accruing — which in practice means the tax is often paid before probate is granted, from funds released early by banks or through HMRC's Direct Payment Scheme.

Worked example: pulling it together

Consider a fictional estate: a person dies owning a house worth £340,000 (held solely in their name), £45,000 in savings and ISAs, a car worth £8,000, and household possessions worth £6,000. They made a single gift of £10,000 to a grandchild 2 years before death (within the £3,000 annual exemption for one of those years, so £7,000 is a taxable gift). They had no debts beyond a £1,200 credit card balance and £2,000 of funeral costs.

Gross estate: £340,000 + £45,000 + £8,000 + £6,000 = £399,000. Add back the taxable portion of the lifetime gift: £399,000 + £7,000 = £406,000. Deduct debts and funeral costs: £406,000 − £3,200 = £402,800 net estate.

Because this is below the £500,000 combined nil-rate and residence nil-rate band (assuming the home passes to a child), no Inheritance Tax is due — but the personal representatives will still need to report the estimated value as part of the probate application, and check the excepted estate conditions carefully before assuming no further HMRC reporting is needed.

Common mistakes

• Confusing display value with sale value. Household items and cars are valued at what they would realistically fetch if sold, not their insured or replacement value.
• Forgetting jointly held assets entirely. A joint tenancy passing automatically to a survivor is still relevant to the Inheritance Tax calculation, even though it bypasses the will.
• Missing gifts made years earlier. The 7-year look-back catches gifts many families have long forgotten about — bank statements, and conversations with family members, are the usual way to reconstruct them.
• Assuming IHT205 still applies. Some older guidance and templates online still reference the pre-2022 process. For deaths from 1 January 2022 onwards, the excepted estate information goes into the probate application itself.
• Under-valuing property to avoid tax. HMRC can and does challenge low property valuations, and a financial penalty can follow deliberate or careless under-valuation.
• Leaving debts out of the final calculation. Debts don't count in the initial estimate, but they must be declared and deducted when the value is formally reported.

What to do next

1. Identify every asset and debt. Contact banks, pension providers, and other institutions to confirm balances as at the date of death.
2. Estimate the total value, including jointly held assets and gifts made in the previous 7 years, using GOV.UK's Inheritance Tax checker as a starting point.
3. Check whether the estate is "excepted" or needs full details sent to HMRC.
4. Value property and high-value chattels professionally where the figure is material to the tax position.
5. Report the value — either as part of the probate application (excepted estates) or via form IHT400 and its schedules (all other estates), within the 12-month deadline.
6. Keep every record — valuations, letters, and calculations — in case HMRC queries the estate later.
7. Speak to an adviser early if the estate involves trusts, a business, foreign assets, or a value close to the tax thresholds — these are the situations most likely to need a full IHT400 return.

This guide provides general information about estate valuation for probate in England and Wales. It is not legal advice and is not a substitute for advice tailored to your specific circumstances. The law and figures described were accurate as at July 2026 and are subject to change — always check GOV.UK and legislation.gov.uk for the current position.

Last reviewed: July 2026 by a non-practising solicitor · Next review due: July 2027 or on legislative change.