How to value an estate

Introduction

To find out if there’s Inheritance Tax to pay, you need to value the money, property and possessions (‘estate’) of the person who’s died.

You must do this before applying for probate (if you need it).

You need to complete 3 main tasks when you value the estate.

  1. Identify the person’s assets and debts such as savings, investments, mortgages and loans.
  2. Estimate the estate’s value. This will affect how you report the value, and the deadlines for reporting and paying any Inheritance Tax. Most estates are not taxed.
  3. Report the value of the estate – if and how you do this depends on whether you need to send full details of the estate and its value.

Valuing an estate can take several months, but it can take longer if it’s a big or complicated estate (for example if it involves trusts or there’s tax to pay).

If the estate owes Inheritance Tax, you must report its value within one year using form IHT400. You cannot apply for probate until you have done this.

You’ll normally have to start paying Inheritance Tax before probate is granted.

You must pay Inheritance Tax by the end of the sixth month after the person dies to avoid paying interest.

Getting help

You can contact Ashford Borough Citizens Advice for general advice. You may need a professional (for example a solicitor) to help with some or all of the tasks involved with valuing an estate.

Identify assets and debts

Before you can value the money, property and possessions (the estate) of the person who’s died, you’ll need to identify:

  • the things they owned (their assets)
  • their debts

Assets include things like bank accounts, savings and pensions, as well as property, household goods and personal items.

Debts include things like utility bills, mortgages and money owed on credit cards. They also include funeral expenses, such as the cost of a funeral director, a headstone or plaque and refreshments.

You’ll then need to:

  • find out which organisations to contact (you can do this by searching through the person’s papers or asking friends, family and any solicitor or accountant they had)
  • write to these organisations asking for the value of the asset or debt when the person died (you’ll need to include a copy of the death certificate)

Estimate the estate’s value

You need an estimate of the estate’s value (the money, property and possessions of the person who’s died), to find out if there’s Inheritance Tax to pay. 

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

  • the value of the estate is below the £325,000 threshold
  • you leave everything above the £325,000 threshold to your spouse, civil partner, a charity or a community amateur sports club

If the person who died was widowed or is giving away their home to their children, the tax threshold can be higher, currently £500,000.

You need to estimate the total value of the estate. This includes:

You need to work out the value of any gifts made by the person who died.

Gifts only count towards the value of an estate if:

  • they were made in the 7 years before the person died 
  • the total value of gifts given in any year was over the £3,000 annual exemption

If a person lives for 7 years after making a gift, there’s no Inheritance Tax to pay.

Any gift a person continued to benefit from before they died also counts towards the value of an estate – for example, if they gave away a house but lived in it rent-free (known as a ‘gift with reservation’).

If you’re not sure when a gift should be included, check the rules on giving gifts.

Your estimate will help you check if the estate’s value exceeds the threshold. If it does, you’ll need to provide valuations for the assets to see how much Inheritance Tax is due.

You’ll also need your estimate if you want to apply for probate, even if no Inheritance Tax is due.

You can work out the estimate yourself or you can use the Inheritance Tax checker.

Check if you need to pay Inheritance Tax

The tool will:

  • give you an approximate value of the estate
  • help you decide whether any Inheritance Tax is likely to be due or not

The tool does not:

  • calculate the amount of Inheritance Tax due
  • tell HMRC about the estate’s final value

You can save and print your results once you’ve answered all the questions.

Before you start, you’ll need the following information:

  • details of the person’s assets, including joint assets
  • details of any gifts they made

Start now

Whether you need to send full details of the estate depends on several things, including whether there’s Inheritance Tax to pay.

‘Full details’ means the estate’s assets and debts, any gifts made, and any reliefs and exemptions. These will provide you with the total value of the estate.

You may have to pay a financial penalty if you give inaccurate information.

If Inheritance Tax is due

If Inheritance Tax is payable you’ll need to send full details of the estate, within 12 months of the person dying and before applying for probate.

You need to download and complete form IHT400. Send it to the address on the form.

When completing and submitting the form, make sure you: 

  • answer all relevant questions 
  • complete and send any relevant additional pages (known as ‘schedules’)  
  • only send a copy of the will (if there is one) and include copies of any official alterations (known as ‘codicils’) – do not send any originals

You can read guidance on how to complete form IHT400.