Valuing an estate decides the tax, so the figures need more than a guess. The law’s test is simple to state and demanding to apply.
The test is the open market price on the date of death
The Act says the value of property is the price it might reasonably be expected to fetch if sold in the open market at that time (Inheritance Tax Act 1984, section 160, checked 1 November 2026). For an estate, that time is the date of death, not the date you get round to it.
Two consequences follow. Insurance value and replacement cost are the wrong figures, because they measure buying rather than selling. And a value has to reflect the asset as it stood on the day, including a leaking roof or an out-of-date kitchen.
What has to be valued
The list is wider than the house and the bank accounts. GOV.UK tells you to include household and personal items, naming antiques, electrical goods, furniture, jewellery, paintings and stamp collections (GOV.UK, Estimate the estate’s value, checked 1 November 2026). Each value feeds the figure that decides whether Inheritance Tax is due.
The instruction for those items is practical: for things such as cars, jewellery and paintings, work out how much you would have got if you had sold them (GOV.UK, Estimate the estate’s value, checked 1 November 2026). Second-hand furniture is often worth far less than families expect, and a single piece of jewellery or a painting sometimes far more.
The house, and the Valuation Office Agency
The house is usually the largest figure and the one HM Revenue and Customs (HMRC) is most likely to test. HMRC’s manual says that when it values land it relies on professional advice from the Valuation Office Agency (HMRC IHTM23002, checked 1 November 2026). A figure on the form can therefore be compared with the view of a government valuer.
An estate agent’s appraisal is a reasonable starting point, particularly where no tax is due. Where the estate is near or above a threshold, a valuation from a surveyor, prepared on an open market basis, is the evidence that holds up best if HMRC asks, and the report is worth keeping with the probate papers.
Contents, and a professional valuation
For household and personal goods, HMRC is generally willing to accept a professional opinion. Its manual says that if a professional valuation of household goods is provided, prepared on the basis of open market value, it will usually be able to accept it (HMRC IHTM21041, checked 1 November 2026).
The basis matters. A valuation done for insurance gives a replacement figure, which is the wrong measure and usually too high. Ask the valuer for a probate valuation at open market value on the date of death.
HMRC’s scrutiny is proportionate. Its manual tells staff to concentrate on the higher value items or estates, where any adjustment in value is likely to be larger (HMRC IHTM21012, checked 1 November 2026).
A jointly owned house share is discounted
A share of a house owned with someone else is worth less than its arithmetic share, because nobody buys half a house easily. HMRC’s manual accepts that the nature of jointly owned property results in the discounting of the open market value of land or buildings (HMRC IHTM15072, checked 1 November 2026).
The discount is not automatic for everything jointly owned. For household goods and other chattels, HMRC’s manual says it does not apply a discount automatically (HMRC IHTM21043, checked 1 November 2026).
Spouses and civil partners have a further rule. Where valuing a person’s property together with their spouse’s related property produces a higher figure, the related property rules can require the property to be valued on that combined basis (HMRC IHTM09731, checked 1 November 2026).
If the house sells for less
A sale below the probate value can reduce the tax, within limits. Where land is sold by the appropriate person within three years of the death, the Act allows the sale value to be substituted for the value at death (Inheritance Tax Act 1984, section 191, checked 1 November 2026). It has to be claimed.
Small differences do not qualify. The relief does not apply where the difference is less than the lower of £1,000 and 5% of the value at death (Inheritance Tax Act 1984, section 191, checked 1 November 2026). A house that sells for a few thousand pounds under a sensible valuation is not, on its own, a reason to reopen the figures.
If it sells for more
A higher sale price leads to Capital Gains Tax rather than more Inheritance Tax. The Act treats assets as acquired by the personal representatives on the death for a consideration equal to their market value at the date of death (Taxation of Chargeable Gains Act 1992, section 62, checked 1 November 2026).
The probate value becomes the starting point for any gain, which is why an unrealistically low valuation is a false saving. It may reduce Inheritance Tax on paper, but it raises the gain on a sale. Our page on capital gains on inherited property covers how that gain is taxed, including the 60-day reporting rule.
Keep the evidence
Valuations are only as good as the paper behind them. GOV.UK says HMRC can ask to see your records up to 20 years after Inheritance Tax is paid (GOV.UK, Records, checked 1 November 2026). Keep the valuation reports, photographs of higher-value items, and anything showing the condition of the house.
Once the values are settled, they feed the forms. Our page on the Inheritance Tax forms explains which estates report to HMRC and how, and how probate works sets out where valuation sits in the whole job.