Probate Valuations: A Guide for Executors

Why the date of death value matters

Executors have to work out the value of everything the person owned on the date they died, including their home and any other property. That figure is used to:

• find out whether Inheritance Tax is payable, and how much;
• apply for probate;
• set the starting value for Capital Gains Tax if the property is later sold or kept by the beneficiaries. A gain is measured from the date of death value, so a figure that's too low can mean more tax later.

Inheritance Tax in brief

Normally no Inheritance Tax is due if the estate is worth less than £325,000, or if everything above that goes to a spouse, civil partner or charity. The threshold can rise to £500,000 when the home is left to children or grandchildren, and unused allowances can pass to a surviving spouse or civil partner. Above the threshold, the tax is usually 40%.

Gifts made in the seven years before death can count towards the estate. If a property was given away in that time, it may need valuing at the date of the gift as well.

Where Inheritance Tax is due, it normally has to be paid by the end of the sixth month after the month of death, so it's worth getting the valuation done early.

Why a proper valuation is worth having

Property must be valued at its open market value on the date of death: the price it would have fetched if sold on the open market at that time. An estate agent's marketing figure or an online estimate is not the same thing.

HMRC can ask the Valuation Office Agency to check the figure, and can charge penalties if a value is wrong because of carelessness. A written valuation by a chartered surveyor, setting out the comparable sales behind it, gives you evidence to rely on if questions are asked.

Things that affect the value

• Jointly owned property. If the person owned the home jointly with someone other than their spouse or civil partner, a discount (usually 10%) may apply to their share. A spouse or civil partner's share is simply divided equally.
• Condition. The value reflects the property as it stood on the date of death, including any repairs needed.
• Past dates. If you're valuing some time after the death, the valuation is still made at the date of death, using the market evidence from that time.

If the property sells for less

If the property is sold within four years of the death for less than its date of death value, the estate may be able to claim relief and have the Inheritance Tax worked out on the sale price instead. Your solicitor or accountant can advise whether this applies.

Step by step

1. Instruct a chartered surveyor to value the property at the date of death.
2. Use the figure, with your other assets, to work out whether Inheritance Tax is due (GOV.UK has an online checker).
3. Report the estate's value to HMRC and apply for probate.
4. Keep the valuation report: you'll need it if HMRC asks questions, and the beneficiaries will need it for Capital Gains Tax.

This guide gives general information only. It isn't tax or legal advice. For advice on the tax itself, speak to your solicitor or accountant.