How do I value an estate for inheritance tax?
Answered 11 March 2026
Valuing an Estate for Inheritance Tax
What the law says
Definition of "estate" A person's estate is "the aggregate of all the property to which he is beneficially entitled", subject to certain exclusions (e.g. excluded property and certain settled property interests). In determining the value of a person's estate, their liabilities at that time shall be taken into account, except as otherwise provided by the Act. Liabilities incurred by a transferor are only taken into account to the extent they were incurred for a consideration in money or money's worth (unless imposed by law).
The open market value rule (IHTA 1984, s.160) The core valuation rule is:
"the value at any time of any property shall for the purposes of this Act be the price which the property might reasonably be expected to fetch if sold in the open market at that time; but that price shall not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time."
Related property (IHTA 1984, s.161) Where the value of property in a person's estate would be less than the appropriate portion of the value of that property aggregated with "related property", the higher (aggregated) value applies. Related property includes property in the estate of a spouse or civil partner, or property belonging to a charity (or similar body) where it became so via an exempt transfer made by the deceased or their spouse/civil partner.
CGT interaction (TCGA 1992, s.274) Where inheritance tax is chargeable on the value of an estate immediately before death and the value of an asset has been ascertained for IHT purposes, that ascertained value is taken as the market value of the asset for Capital Gains Tax purposes as well.
HMRC guidance / practice
General valuation approach IHT is charged by reference to the value transferred by a chargeable transfer, making asset valuation fundamental to the charge. The general rule is open market value (IHTM09703). However, some specific assets require special attention, and the legislation (as interpreted by case law) contains rules on:
- when to value items separately (IHTM09715) vs. together (IHTM09712);
- how to handle related property in a spouse's/civil partner's estate or a charity's estate (IHTM09731); and
- how to value assets where there are restrictions on freedom to dispose (IHTM09771).
What makes up the estate The estate includes the free estate, joint property (IHTM15011), settled property (IHTM16000), and gifts with reservation (IHTM04071) in which the deceased had a beneficial interest in possession.
Valuing items separately vs. together In general, different items of property should be valued separately (e.g. shares, a house, a car). However, items may be valued together if they are worth more together than if sold separately — even if held under separate titles.
Related property rule in practice The related property rules apply where valuing property together with a spouse's/civil partner's property (or a charity's property) produces a higher value than valuing it alone. If property valued under the related property rule is subsequently sold for less within 3 years of death, the personal representatives may be able to claim relief under IHTA 1984, s.176.
Land and buildings Personal representatives must make the fullest enquiries reasonably practicable to value property. For land and buildings, it is appropriate to obtain a professional valuation in accordance with IHTA 1984, s.160 (open market value). Valuers must consider development potential and "hope value" where applicable, as this forms part of open market value whether or not planning permission has been sought or granted.
Listed investments Listed investments are valued at the price shown in the relevant Stock Exchange list (the gross sale price, without deducting brokers' fees or stamp duty). The value is ascertained at the date of death, even if the price has risen or fallen before the investments could actually be sold. Loss on sale of shares relief may be available on losses made within one year of death.
Probate procedure For all estates where probate is sought, personal representatives must provide to the Probate Registry either a statement certifying the estate is below the excepted estate limit, or a statement setting out the proposed open market value of all assets in the estate. HMRC notes that the term "probate values" has no special tax significance.
Citation sources
There are special rules for valuing property (IHTM04030) that is included in an estate (IHTM04029) if there is other property that is ‘related’ to it, IHTA84/S161. The rules apply where, if by valuing the property together, you get a higher value than by the normal method of valuation. Broadly speaking, related property (IHTM09733) is property that is in in the estate of a spouse/civil partner (IHTM11032), or belonging to a charity or one of the political, national or public bodies to which exem
PART I GENERAL Main charges and definitions Meaning of estate. 5 1 For the purposes of this Act a person’s estate is the aggregate of all the property to which he is beneficially entitled, except that— a the estate of a person— i does not include an interest in possession in settled property to which section 71A or 71D below applies, and ii does not include an interest in possession that falls within subsection (1A) below unless it falls within subsection (1B) below , and b the estate of a perso
For all estates where probate or its equivalent is sought the personal representatives must provide to the Probate Registry either a statement certifying that the value of the estate is below the limit for excepted estates (a limit related to the level at which liability to Inheritance Tax starts) or a statement setting out the proposed open market value of all the assets in the estate. Where figures are returned under this procedure, taxpayers and their advisers often refer to them as probate v
When you investigate an undervaluation of land or buildings you should consider whether it is appropriate to offer the agents any advice on the following lines to help ensure future compliance. ‘IHTA 1984 S.216 requires personal representatives to make the fullest enquiries reasonably practicable in order to be able to complete and deliver an account of the estate to HMRC specifying to the best of their knowledge and belief all appropriate property in the estate and the value of that property. T
Like other property, listed investments have to be valued for Inheritance Tax (IHT) purposes at the price they would fetch in the open market (IHTM09703) (IHTA84/S160). The general valuation rule is that you will apply the price shown in the relevant Stock Exchange list. This reflects the fact that prices are fixed by reference to normal dealings in holdings of marketable size, and that valuation by reference to marketable lots is the proper basis for IHT purposes (Buccleuch v IRC [1967] 1 AC 50
Inheritance tax is charged by reference to the value transferred by a chargeable transfer (IHTM04021). The way that we go about valuing assets is therefore fundamental to the charge. The general rule is that the value of any asset is its ‘open market value’ (IHTM09703). However, some specific assets (IHTM09702) need special attention and the IHT legislation, as interpreted by case law, contains other rules that tell you when you should value items separately (IHTM09715) and when you should bring
ables him, or would if he were sui juris enable him, to dispose of any property other than settled property, or to charge money on any property other than settled property, shall be treated as beneficially entitled to the property or money; and for this purpose “ general power ” means a power or authority enabling the person by whom it is exercisable to appoint or dispose of property as he thinks fit. 3 In determining the value of a person’s estate at any time his liabilities at that time shall
The ‘estate’ (IHTM04029) is defined in IHTA84/S5(1). In addition to the free estate it includes joint property (IHTM15011), settled property (IHTM16000) and gifts with reservation (GWR)(IHTM04071) in which the deceased had a beneficial interest in possession. In general you should look to value the different items of property (IHTM04030) in an estate separately (IHTM09715). For example, in a straightforward case you would look to value shares, the deceased’s house and car separately. But this do
Part VIII Supplemental Value determined for inheritance tax. 274 Where on the death of any person inheritance tax is chargeable on the value of his estate immediately before his death and the value of an asset forming part of that estate has been ascertained (whether in any proceedings or otherwise) for the purposes of the application of that tax to the estate , the value so ascertained shall be taken for the purposes of this Act to be the market value of that asset at the date of the death.
PART VI VALUATION CHAPTER I GENERAL Market value. 160 Except as otherwise provided by this Act, the value at any time of any property shall for the purposes of this Act be the price which the property might reasonably be expected to fetch if sold in the open market at that time; but that price shall not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time.