How is a house valued for inheritance tax?

Inheritance tax is back in the headlines. On 4 October 2026, at the Conservative Party conference in Birmingham, party leader Kemi Badenoch signalled that her party wants to end inheritance tax. That is an opposition proposal, not a change in the law, so families dealing with an estate today work to the rules below.

What value does HMRC use for a house?

Inheritance tax is a tax on the estate of someone who has died, charged at 40% on the value above the tax-free allowances. For a house, HMRC uses the open market value at the date of death. Open market value is the price the property might reasonably be expected to fetch if sold in the open market at that time, the definition set out in section 160 of the Inheritance Tax Act 1984.

It is a snapshot of one day. It ignores what your parent paid, offers that arrive months later, and any work you might do before selling.

How much can an estate be worth before inheritance tax is due?

The residence allowance shrinks for estates worth more than £2 million. Everything left to a spouse or civil partner passes free of inheritance tax.

Can I use an estate agent's valuation for probate?

Yes. An estate agent's valuation is accepted as evidence, and for an estate clearly below the threshold several agent opinions are usually enough. Where the estate is close to the threshold, or the house is unusual, a RICS valuation is the safer choice.

A RICS valuation is a formal written report by a chartered surveyor, prepared to the Royal Institution of Chartered Surveyors' 'Red Book' standards. It costs more than an agent's opinion, and it carries more weight if HMRC asks questions.

• The valuation is stated as at the date of death, not the date you asked for it.
• It reflects the house as it was on that day, including its condition and any repairs it needed.
• It is backed by comparable sales from the same street or area around that date.
• If you have several opinions, the figure you declare sits inside their range, not below it.

The probate value is not the price you hope for. It is the price the house could have fetched on the day.

What if the house sells for less than the probate value?

This matters more than usual this autumn. Nationwide reported on 1 October 2026 that UK prices fell 0.2% in September to an average of £274,251, and that annual growth halved to 0.8%. Zoopla's index the same day showed prices falling in London and flat prices falling in 9 of 11 UK regions.

Loss on sale of land relief lets the tax be recalculated on the lower sale price. The person liable for the inheritance tax claims it on HMRC form IHT38. GOV.UK says qualifying sales must in most cases be made within three years of the death, and some sales within four years also qualify.

HMRC advises waiting until every property you plan to sell has been sold before claiming, because a claim cannot be withdrawn once made.

What if the house sells for much more than the probate value?

A sale soon after the death is strong evidence of what the house was worth. If it sells well above the declared figure, HMRC can query the probate value, and an inaccuracy HMRC judges careless can carry a penalty of up to 30% of the extra tax.

Any rise in value between the death and the sale can also be liable to Capital Gains Tax, because the probate value becomes the starting price for whoever inherits. A realistic figure on day one protects you both ways.

Does a jointly owned house get a discount?

Sometimes. Where the person who died owned the house as joint tenants with someone other than a spouse or civil partner, GOV.UK says to divide the value by the number of owners and take 10% off the share of the person who died. Tenants in common value their own share. In Scotland, £4,000 comes off the value of the whole property instead.

How do executors keep control of the valuation?

Fix the date of death as the valuation date, gather more than one opinion, and keep the evidence on file. If the estate is near a threshold, pay for a RICS report. Then sell on your own timetable, knowing relief exists if the market slips and the record is clean if it rises.