When you’re dealing with a loved one’s estate, you’ll come across two important but often confusing terms: probate value and market value. But what’s the difference? And why does it matter?

Probate value is the estimated worth of assets at the date of death, used for inheritance tax. Market value, on the other hand, is what you’d expect to get if you sold an asset today. Getting to grips with these concepts is important for executors and beneficiaries alike – especially when property is involved, as it’s often the largest single asset in an estate.

Having helped thousands of executors and beneficiaries sell inherited properties over the years, we’ve seen first-hand how the gap between these two values can create confusion, unexpected tax bills, and even disputes between family members. Let’s break it all down.

Probate Value vs Market Value at a Glance

What exactly is probate value?

Probate value, sometimes called “date of death” value, is what HMRC wants to know when calculating inheritance tax. It’s a snapshot of what everything in the estate was worth when the person died. This includes the family home, any other properties, cars and other vehicles, jewellery and valuables, savings and investments, and even business interests.

For some things, like bank accounts, it’s easy to pin down the value. You simply need to check the balance on the day the person died. For others, like property or antiques, you might need to call in the professionals. A RICS-qualified surveyor can give you an accurate valuation of a property, while specialist valuers can help with things like artwork or collectibles.

It’s important to be as accurate as possible with probate values. HMRC can challenge valuations they think are too low through their District Valuer Service, which could lead to penalties. On the flip side, overvaluing assets could mean paying more inheritance tax than necessary.

In our experience, getting a professional property valuation early on is always worthwhile. We’ve seen cases where executors relied on informal estimates, only to face HMRC queries months later that delayed the entire probate process. It’s one of the most common mistakes, and one of the easiest to avoid.

And market value?

Market value is simpler in concept – it’s what you’d get if you sold something on the open market today. But in practice, it’s not always straightforward. The property market might have changed since the date of death, or that classic car might suddenly be in high demand.

Market value can go up or down based on the state of the economy, local property trends, supply and demand, and the condition of what you’re selling. For example, a house that was worth £300,000 at the date of death might now be worth £350,000 due to a booming local property market. Or it could have dropped in value if the housing market has declined since the date of death.

Why the difference matters

Understanding the difference between probate and market value isn’t just about definitions. It can have a big impact on inheritance tax, how assets are shared out, and what happens when you come to sell.

Inheritance Tax implications

Inheritance Tax is based on the probate value. The current nil-rate band is £325,000 per person – this threshold has been frozen since 2009 and will remain at this level until at least 2030-31. If the estate is worth more than this, anything above the threshold is normally taxed at 40%.

Importantly, there’s an additional Residence Nil-Rate Band (RNRB) of £175,000 available when a home is left to direct descendants such as children or grandchildren. This can increase the effective tax-free threshold to £500,000 per person. For married couples or civil partners, unused allowances can be transferred to the surviving spouse, meaning up to £1 million can potentially pass tax-free (GOV.UK: Inheritance Tax thresholds).

So if the probate value pushes the estate above these thresholds, it directly increases the Inheritance Tax bill.

Capital Gains Tax considerations

If you sell an inherited asset for more than its probate value, you may need to pay Capital Gains Tax (CGT) on the difference. The probate value becomes your “base cost” for CGT purposes.

For the 2025/26 tax year, the CGT annual exempt amount is £3,000 per person. Any gain above this is taxed at 18% for basic-rate taxpayers or 24% for higher-rate taxpayers on residential property (GOV.UK: CGT rates and allowances).

For example, if a property was valued at £300,000 for probate but you sell it two years later for £350,000, you’d have a £50,000 gain. After deducting the £3,000 annual exempt amount, you’d pay CGT on £47,000.

You must also report and pay CGT on UK residential property within 60 days of completion. Missing this deadline can result in penalties and interest.

Fair distribution of assets

When dividing assets between beneficiaries, knowing both values helps ensure everyone gets a fair share. If one beneficiary receives a house valued at £200,000 for probate, but it’s now worth £250,000, this might need to be taken into account when dividing the rest of the estate.

We’ve seen this cause real friction between families. In one situation, two siblings disagreed because the property had risen significantly in value between the date of death and the sale, and the beneficiary who received cash instead felt shortchanged. Getting valuations right from the start and communicating clearly can help avoid these disputes.

Potential challenges

If HMRC thinks you’ve undervalued assets, they might investigate. This could lead to penalties or having to pay more tax. On the flip side, beneficiaries might question high valuations that lead to a bigger tax bill.

Getting the probate value right

Accurate probate valuations are crucial to avoid headaches with HMRC. Here are some tips to help you get it right:

Get professionals to value high-price items, especially property. A RICS-qualified surveyor can give you a detailed report that will stand up to scrutiny. For estates that are likely to exceed the Inheritance Tax threshold, HMRC may expect a formal RICS Red Book valuation rather than an informal estate agent estimate.

Use reliable sources for valuing shares and investments. The stock market value on the date of death is usually straightforward to obtain.

Keep detailed records of how you worked out the values. This includes keeping copies of professional valuations, screenshots of share prices, and notes on how you valued smaller items.

Be consistent in your approach. If you’re using online valuations for some items, do this for all similar items.

Consider using a probate specialist if the estate is complex. They can guide you through the process and help ensure everything is valued correctly.

What if the market value changes dramatically?

Sometimes, the value of an asset can change significantly between the date of death and when you sell it. This might be because the property market has moved, stock markets have been volatile, or the condition of the asset has changed.

If the value drops: IHT loss relief

If the market value has dropped significantly, you might be able to claim loss relief, which allows the estate to recalculate the Inheritance Tax based on the lower sale price rather than the original probate value.

For listed shares and qualifying investments, the relief applies if sold within 12 months of the date of death using HMRC form IHT35. An important point: you must include all qualifying investments sold during that 12-month period in the claim, not just those sold at a loss. Gains on other sales will reduce the overall relief available.

For land and property, a separate relief is available if the property is sold within 4 years of the date of death. However, this only applies if the loss exceeds the lower of £1,000 or 5% of the probate value. The sale must be made by the executors – beneficiaries who have inherited the property and sell it themselves cannot claim this relief. The claim must be submitted within 7 years of death.

If the value rises: Capital Gains Tax

If the value has gone up since the date of death, watch out for potential Capital Gains Tax when you sell. As explained above, you’ll pay CGT on the increase in value above the probate value, after deducting your £3,000 annual exempt amount and any allowable costs such as solicitors’ fees or improvement works.

It’s always worth speaking to a qualified accountant about probate-related taxes, ideally from the beginning, so they can help plan the most tax-efficient approach.

Valuing property for probate

Property is often the biggest asset in an estate, and getting the value right can be tricky. Here’s what to do:

Get at least three estate agent valuations. They’ll know the local market and can give you a good idea of what the property might sell for. Having multiple opinions helps establish a credible figure.

Consider using a RICS surveyor for a formal valuation. This is especially important for unusual properties, those in sought-after areas, or where the estate is likely to exceed the Inheritance Tax threshold.

Think about any factors that might affect the value. Structural problems, development potential, sitting tenants, or restrictive covenants can all influence what a property is worth. A good surveyor will take these into account.

Remember, the probate value should reflect what the property was like when the person died. If it’s fallen further into disrepair since then, this shouldn’t affect the probate value. It’s always best to start getting things valued within a short time after the death, to make valuations easier.

Keep in mind that the probate value might not be the same as what you eventually sell for. The market can change, and buyers might negotiate.

Selling property during probate

If you need to sell a property during probate, you’re dealing with both probate and market values at once. This can get complicated, especially if there’s a significant difference between the two.

For example, let’s say a house was valued at £300,000 for probate. Six months later, when you come to sell, the local market has increased and now it’s valued at £350,000. This is good news in terms of the money available to beneficiaries, but it means there could be Capital Gains Tax to pay on the £50,000 increase. On the other side of the coin, the property value may have decreased due to a stagnant market, meaning you sell for less than the probate value and may need to look into the IHT loss relief options described above.

This is why, in our experience, it’s often best to try and sell relatively quickly while the probate value and the market value are closer together. The longer you wait, the bigger the potential gap – and the more complicated the tax position becomes.

If you’re in this situation, Property Rescue can help. We specialise in quick probate property purchases and have helped thousands of executors and beneficiaries sell inherited homes. We can buy the probate property from you directly, in as little as just one week.

Get a free, no-obligation cash offer for the property today, and you could have the property sold by this day next week if you choose, with the cash already in your bank and any outstanding mortgage debt settled.

Common mistakes to avoid

When you’re dealing with probate and market values, watch out for these pitfalls:

Undervaluing assets to try and reduce Inheritance Tax – HMRC can and do investigate valuations they consider too low, and penalties for negligent valuations can be significant.

Overvaluing assets – which could mean paying more tax than necessary. While accuracy is important, you don’t want to pay more than is due.

Not getting professional valuations for expensive or unusual items – it’s worth paying for expertise, particularly for property, artwork, or collectibles.

Forgetting that market values change during probate – keep an eye on this, especially for property and shares, and consider the tax implications of any gap between probate and sale values.

Missing the 60-day CGT reporting deadline – if you sell an inherited property for more than its probate value, you must report and pay the CGT within 60 days of completion.

Not taking professional tax advice early enough – the interaction between IHT, CGT, and loss relief can be complex. Bringing an accountant in at the start can save money and stress later.

Getting help

Given how complex this can all be, it’s often worth getting professional help. You might want to talk to probate specialists, chartered surveyors, tax advisors, or solicitors who specialise in dealing with estates.

Yes, there will be some costs involved. But professional advice can help make sure you get the valuations right, make probate smoother, and potentially save money on taxes in the long run. They can also help you navigate complex situations, like selling assets during probate or dealing with unusual items in the estate.

If you need to sell an inherited property quickly and hassle-free, get in touch with Property Rescue for a free, no-obligation cash offer. We’ve been helping families through the probate property process since 2009, and we understand how stressful it can be.

Final note

Understanding probate value and market value is key when you’re dealing with someone’s estate. Probate value gives HMRC a snapshot for tax purposes, while market value shows what something’s worth right now if you sold it. By getting to grips with these ideas and getting help when you need it, executors can handle probate more effectively and make sure everyone gets a fair outcome.

This article is for general information only and does not constitute financial, tax, or legal advice. Tax rules and thresholds can change – always consult a qualified accountant or solicitor for advice specific to your circumstances. Tax figures referenced are for the 2025/26 tax year.