Valuing an estate sounds like an accountant’s job, and for complex estates it can be. For most, it is a careful adding-up exercise: what the person owned, minus what they owed, at the date they died. You need the figure for two reasons: it decides whether inheritance tax is due, and it is part of applying for probate. Here is how to do it without it taking over your life.
What to include
Add up everything the person owned at the date of death:
- Property and land.
- Money in banks, building societies and savings.
- Investments, ISAs, Premium Bonds and shares.
- Vehicles and valuable possessions.
- Any money owed to them.
- Certain gifts made in the seven years before death.
Then subtract what they owed: the mortgage, loans, credit cards, outstanding bills and reasonable funeral costs. The result is the value of the estate.
Valuing property and possessions
For a property, you can start with estate agent appraisals, ideally more than one, and for larger or taxable estates a formal valuation from a chartered surveyor is safer. For possessions, value them at what they would realistically sell for, not the insured or sentimental value. Ordinary household contents are usually worth far less second hand than people expect.
The inheritance tax thresholds
Most estates pay no inheritance tax. Everyone has a nil-rate band of £325,000, and if the home passes to children or grandchildren there is an additional residence nil-rate band of £175,000, giving up to £500,000 for an individual. A married couple or civil partners can combine their allowances, potentially passing on up to £1,000,000 before tax. These thresholds are frozen until April 2031. Anything above the available threshold is usually taxed at 40 per cent, and there are reliefs and exemptions that can change the picture, so take advice if the estate is near or above the line.
Where to report it
You report the value as part of the probate and inheritance tax process. Even where no tax is due, you usually confirm the estate’s value to HMRC and HM Courts and Tribunals Service. Keep your workings and the valuations you relied on, in case HMRC asks how you reached a figure.
When to get help
If the estate includes a business, agricultural land, trusts, foreign assets or significant gifts, or if it is near the tax threshold, this is the point to involve a solicitor or a STEP-qualified adviser. The cost is usually modest against the risk of getting a taxable estate wrong.
Frequently asked questions
What value do I use, the date of death or now?
The value at the date of death. Later changes, such as a house selling for more or less, are handled separately.
Do I have to pay for professional valuations?
Not always. For modest estates, estate agent appraisals and sensible second-hand values are usually fine. For larger or taxable estates, formal valuations protect you if HMRC queries the figures.
Will there definitely be inheritance tax to pay?
Most estates pay none, because of the £325,000 nil-rate band and the extra £175,000 where a home passes to direct descendants. Tax usually applies only above the available threshold.
Sources
- GOV.UK: Valuing the estate of someone who has died
- GOV.UK and HMRC: Inheritance Tax thresholds (nil-rate and residence nil-rate bands, frozen to April 2031)
Reviewed by a STEP member (name to be assigned). Last reviewed: [set on publish]. This is general information, not legal or financial advice and does not replace professional estate or tax advice.
