How to value an estate for Inheritance Tax and report its value

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Estimate the estate’s value

You need an estimate of the estate’s value (the deceased’s money, property and possessions), 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.

Working out your estimate

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

At this stage, your estimate only needs to be accurate enough for you to know if the estate owes tax. You’ll need accurate valuations if the estate owes any tax.

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

Use the online Inheritance Tax checker

The checker will:

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

The checker does not:

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

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Before you start

You’ll need the following information to estimate the estate’s value:

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

Valuing the assets

Start by listing the person’s assets - the things the person owned with a monetary value.

These may include:

  • their home
  • any other properties, buildings or land
  • money in banks, building societies or ISAs or cash in their home
  • stocks and shares
  • household and personal items, including furniture, paintings and jewellery
  • cars, caravans or boats
  • foreign assets, such as property abroad
  • money they’re owed, for example wages or refunds from household bills
  • payments when they died, for example life insurance or a lump sum ‘death benefit’ from a pension

Then estimate the value of each on the date the person died.

Include all assets in your estimate. This includes any left to the person’s spouse, civil partner or a charity - you will not pay tax on these assets.

For items such as jewellery, paintings or other household goods, work out how much you would have got if you’d sold them on the open market. You can use online marketplaces to help work out their value.

Valuing joint assets

You need to find out what assets the person owned with someone else and how they were owned.

The rules for valuing joint assets, such as property, jewellery or paintings, are different depending on whether they were owned as:

  • ‘joint tenants’ (known as ‘joint owners’ in Scotland)
  • ‘tenants in common’ (known as ‘common owners’ in Scotland)

Joint tenants

Joint tenants automatically pass on any assets, such as land or property, to the other owners if one of them dies.

If the asset, such as land or property, was owned as a joint tenant with the person’s spouse or civil partner, divide the value of the asset by 2.

If land or property was owned with other joint tenants, for example friends or siblings, do both of the following:

  • divide the value by the number of owners
  • take 10% from the share of the person who died

Example

The deceased owned a property as a joint tenant with 3 other people. The property is worth £200,000 on the date they died, giving them a £50,000 share (£200,000 divided by 4).

After 10% (£5,000) is deducted from the deceased’s £50,000 share, the final value is £45,000 (£50,000 - £5,000 = £45,000).

In Scotland, if land or property was owned jointly with others (excluding a spouse or civil partner), take £4,000 off the value of the whole asset before working out the deceased’s share.

Example

The deceased owned a property in Scotland as a joint owner with 3 other people. The property is worth £200,000 on the date they died.

After £4,000 is taken away from the total value of the property, this leaves £196,000 (£200,000 - £4,000).

When divided by the number of owners, the deceased’s share of the property is £49,000 (£196,000 divided by 4).

To value a joint bank account, divide the amount by the number of account holders, unless it’s in joint names for convenience only. For example, an older person may add their child to help them with the account. If so, use the amount the deceased actually owned instead.

Tenants in common

The rules are different for tenants in common as they do not automatically pass on any assets they jointly own.

If the deceased jointly owned property or land as a tenant in common, work out the value based on their share.

Working out the value of any gifts

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 and the total value of the gifts 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’).

There’s no Inheritance Tax to pay on gifts to charities or political parties.

What counts as a gift

A gift can include:

  • money
  • household and personal goods, for example, furniture, jewellery or antiques
  • a house, land or buildings
  • stocks and shares listed on the London Stock Exchange
  • unlisted shares held for less than 2 years before the person’s death

Checking for gifts

You can check for gifts by:

  • going through bank statements
  • talking to family members
  • looking through financial documents

Record the value of any gift and the date it was made.

Estimate the gift’s value

To estimate the value of each gift, use either:

  • the approximate value of the gift at the time it was made (realistic selling price)
  • the realistic selling price of the gift if the deceased continued to benefit from the gift after giving it away (a ‘gift with reservation’)

Debts

Do not include the estate’s debts when you estimate the gross value. You will however need to tell HM Revenue and Customs (HMRC) about any debts when you report the value of the estate.

Check for records of debts when the person died, for example:

  • their mortgage, loans, credit cards or overdrafts
  • ‘liabilities’ like household bills or bills for goods or services they’d received but not yet paid for (like building work, decorators, accountants)

What to do next

Check if you need to send full details of the estate’s value.

View a printable version of the whole guide

Part of What to do when someone dies: step by step

  1. Step 1 Register the death

    1. Register the death

    Check what to do if:

  2. Step 2 Tell government about the death

    The Tell Us Once service allows you to inform all the relevant government departments when someone dies.

    1. Use the Tell Us Once service to tell government
    2. If you cannot use Tell Us Once, tell government yourself

    You'll also need to tell banks, utility companies, and landlords or housing associations yourself.

  3. Step 3 Arrange the funeral

    1. Arrange the funeral
    2. Get help paying for a funeral
    3. Get help paying for a child's funeral

  4. Step 4 Check if you can get bereavement benefits

    You might be eligible for financial help.

    Check if you can get:

  5. and Deal with your own benefits, pension and taxes

    Your tax, benefit claims and pension might change depending on your relationship with the person who died.

    1. Manage your tax, pensions and benefits if your partner has died
    2. Check how benefits are affected if a child dies

  6. and Find bereavement support and services

    Get help with managing grief and the things you need to do when someone dies.

    1. Find bereavement help and support
    2. Find bereavement services from your local council

  7. and Check if you need to apply to stay in the UK

    If your right to live in the UK depends on your relationship with someone who died you might need to apply for a new visa.

    Check the rules if:

    1. Contact UKVI to check the rules for other visas

  8. Step 5 Value the estate and check if you need to pay Inheritance Tax

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

    1. Estimate the value of the estate to find out if you need to pay Inheritance Tax
    1. Find out how to report the value of the estate
    1. Pay Inheritance Tax if it’s due

  9. Step 6 Apply for probate

    You might need to apply for probate before you can deal with the property, money and possessions (the ‘estate’) of the person who died.

    1. Check if you need to apply for probate
    1. Apply for probate

  10. Step 7 Deal with the estate

    Pay any debts or taxes owed by the person who's died. You can then distribute the estate as set out in the will or the law.

    1. Deal with the estate
    1. Update property records