Thinking about what will happen to your assets after you die is something many people prefer to avoid. Yet without a valid Will, your estate will be divided according to strict intestacy laws, not your wishes.
Writing a Will is the first step toward peace of mind, but even with a Will in place, your loved ones will still need to manage a detailed legal and administrative process after your death. Much of this revolves around probate: the process of managing, valuing and distributing your estate.
What is probate?
Probate is the process of dealing with the estate of someone who has died. It involves paying debts, valuing assets, and distributing what remains according to the Will (or intestacy laws if there isn’t one).
A key part of probate is valuing the estate, as this determines whether Inheritance Tax (IHT) is payable and which forms need to be submitted to HMRC.
How do you value a house for probate?
Property should always be valued at its open market value: what it would reasonably sell for at the date of death, not an insurance or replacement cost. The figure stays at the date of death value, however long probate takes.
The value of any property within an estate helps decide whether IHT is payable and whether the executors must send HMRC the full IHT400 form. For deaths since 1 January 2022, most estates with no IHT to pay (known as “excepted estates”) need no IHT form at all: the values go on the probate application instead.
Accurate valuations are essential because they affect not only IHT but also Capital Gains Tax (CGT) if the property is later sold for more than its declared probate value.
Informal valuations
For standard residential properties where IHT is unlikely to apply, you may obtain three informal valuations from local estate agents and use the average figure. This is often low-cost or free of charge.
Formal “Red Book” valuations
If IHT is likely, a formal valuation carried out by a chartered surveyor (a RICS registered valuer) is recommended. This is known as a Red Book valuation.
It provides a detailed, reasoned report that the executors can rely on if HMRC asks how the figure was reached, and ensures any reliefs, such as Business Property Relief or Agricultural Property Relief, are properly considered.
Professional valuers may also take into account:
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Development potential or “hope value”
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Covenants, easements, or leases that affect the property’s value
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Rental terms or lease lengths, if applicable
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The condition of the property on the date of death, including any repairs it needed
What if the house was jointly owned?
Only the share that belonged to the person who died is part of their estate. How they owned it decides where that share goes:
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Joint tenants: the share passes automatically to the surviving owner, whatever the Will says. It still counts towards the value of the estate for IHT, although it is usually exempt if it passes to a husband, wife or civil partner.
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Tenants in common: the share passes under the Will, or under the intestacy rules if there is no Will.
The title register at HM Land Registry shows who owns the property. A “Form A” restriction on the register usually means the owners held it as tenants in common.
Where the person who died owned the property with someone other than a husband, wife or civil partner, HMRC may accept a discount on the value of their share, often 10%, because a share of a home is harder to sell than the whole property.
What if the house sells for more or less than its probate value?
If the executors sell the house within four years of the death for less than its probate value, they may be able to claim back some of the IHT paid, using HMRC’s form IHT38.
If it sells for more, CGT may be due on the increase since the date of death. The probate value is the starting point for that calculation, so a value that is too low can mean more tax later.
Can HMRC challenge a probate valuation?
Yes. HMRC can ask the Valuation Office Agency to check the value of a house, sometimes long after probate is granted. If the value was too low, the estate may owe more IHT with interest, and a penalty if the executors were careless. Keep the valuation report and the evidence behind it.
Valuing contents and personal effects
The deceased’s personal possessions, from cars and jewellery to furniture, art and collectibles, must also be valued.
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Items under £1,500 can usually be estimated and grouped together, supported by a brief photographic record.
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Items over £1,500 should be professionally valued and listed individually on the IHT400 form.
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Bulk valuations can be used for lower-value items you prefer not to estimate yourself.
Values must reflect the open market price, not replacement or insurance cost.
How is the whole estate valued for probate?
The estate is everything the person owned on the date of death, less what they owed. Each item is valued at that date:
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the house and any other property or land, including a share of a jointly owned home
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money in bank and building society accounts, including interest up to the date of death
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investments such as shares, unit trusts and Premium Bonds
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household contents and personal possessions, including cars and jewellery
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life insurance that pays out to the estate, and money owed to the person who died
Debts are then deducted, such as a mortgage, loans, credit cards, household bills, tax owed and reasonable funeral costs.
Executors usually write to each bank, building society and investment provider for a date of death valuation. The totals go on the probate application and, where it is needed, on HMRC’s IHT400.
The total decides whether IHT is due. At present the first £325,000 of an estate is usually free of IHT (the nil rate band), with up to a further £175,000 when a home passes to children or grandchildren (the residence nil rate band). Anything left to a husband, wife, civil partner or charity is usually exempt.
Why professional advice helps
While it’s possible for executors to complete probate valuations themselves, mistakes can be costly and delay the process. Professional advice ensures the estate is accurately valued, tax liabilities are correctly assessed, and the process runs smoothly. Our guide to acting as an executor explains the rest of the role.
If you need support with probate, estate administration, or Inheritance Tax planning, our Wills, Probate and Trusts Team can help.
Please fill out the contact form on this page, email info@ansons.law, or call 01543 267981, and a member of the team will get back to you.
Disclaimer: The contents of this article are for general information only and do not constitute legal advice. The law and HMRC guidance may have changed since publication. Always seek professional advice before taking action.
