When someone dies, one of the first practical tasks is working out the value of their estate. This is not simply administrative. The figures you produce form the basis of your probate application and, in many cases, determine whether inheritance tax (IHT) is payable. Two terms appear almost immediately: gross value and net value. Both are required for probate, but they serve different purposes.
This guide explains what each figure means, how to calculate them, and why accuracy matters under current UK law.
For the wider picture of how these figures fit into the process, see our guide on how to value an estate for probate.
What is the gross value of an estate?
The gross estate value is the total open-market value of all assets owned by the deceased at the date of death, before any deductions. Nothing is taken away at this stage. You are simply establishing a complete picture of everything the estate contains.
In practice, this means identifying and valuing property, bank accounts, savings, investments, and personal possessions. For most estates, a property is the largest single asset. However, smaller accounts and valuable personal items can add up, so nothing should be overlooked.
The gross value is the starting point for everything that follows.
What is the net value of an estate?
The net estate value is the gross value minus debts and liabilities, including mortgages outstanding on property, credit card balances, personal loans, unpaid utility bills, and funeral expenses.
This figure matters because it reflects what is actually left. In short, the gross value tells you what the estate contains, and the net value tells you what is available for distribution to beneficiaries.
One thing the net value is not is the figure inheritance tax is charged on. Tax is charged on the net qualifying value: the estate after debts, then after exemptions such as the spouse, civil partner and charity exemptions, then after reliefs such as agricultural and business property relief, and then after the available nil-rate bands. An estate passing entirely to a surviving spouse can have a large net value and no inheritance tax at all.
Probate value and inheritance tax value are not the same thing
This is the distinction that causes the most confusion, and it is worth getting straight before you start adding anything up. HMRC works with separate sets of figures: a gross and net value for probate, and a gross, net and net qualifying value for inheritance tax.
The probate figures cover only the assets that actually pass under the grant. The inheritance tax figures are wider and include things that never reach the grant at all. The clearest example is a home held as beneficial joint tenants: it passes to the surviving owner by survivorship, so it is outside the probate estate, but it still counts in the estate for inheritance tax. Nominated assets and most discretionary pension death benefits work the same way.
So when a form asks for “the value of the estate”, check which estate it means.
Why both figures are required
You need the gross value to work out whether the estate qualifies as an excepted estate, and the net value for the probate application, including the court fee.
HMCTS increased the probate application fee from £300 to £526 on 13 July 2026. It is a flat fee, so a £200,000 estate and a £2,000,000 estate pay the same. There is no fee where the estate is £5,000 or less.
Note which figure that £5,000 is tested against: it is the net value, not the gross. The probate application guidance ties the fee to the net figure, so an estate holding £40,000 of assets with £38,000 of debts pays nothing, even though its gross value is well over £5,000.
HMRC will expect both figures to be calculated accurately. Using the wrong figure, or confusing the two, can lead to delays or further queries from the Probate Registry.
How to calculate the gross value of an estate
Calculating the gross value is largely about gathering information and making sure nothing is missed.
All assets owned by the deceased at the date of death must be included at open-market value, including property and land (including any share of jointly owned property), and bank and savings accounts. Investments, shares, personal possessions, and any other assets with a monetary value must also be recorded.
This process takes time, particularly if financial affairs were not fully documented. It often involves contacting banks, reviewing paperwork, and searching for assets held with different institutions.
Valuing assets at the date of death
Once you have identified everything, each asset must be valued as at the date of death. This is a fixed legal requirement.
Property must be valued at its open-market value on the date of death: the price a willing buyer would pay a willing seller on the open market on that date. For bank accounts, this is straightforward. For property, it requires more care.
HMRC does not mandate a particular kind of valuation. What the law requires is the open market value at the date of death, and HMRC’s own guidance says that unless the personal representatives can easily determine that value themselves, it is entirely appropriate to obtain a professional opinion. There is no legal requirement to instruct a chartered surveyor, and an estate agent’s written valuation given on the date of death basis is acceptable. HMRC’s Inheritance Tax Toolkit does go further for larger assets, strongly advising a qualified independent valuer where the value is material and saying that valuations of houses, land and buildings should meet RICS or equivalent standards.
What varies is how defensible the figure is. A RICS Red Book valuation from an accredited surveyor is the strongest evidence and is worth the cost where inheritance tax is payable or the figure sits close to a threshold, because that is where HMRC is most likely to look. A written estate agent valuation stating the open market value at the date of death is acceptable for straightforward cases.
How the figures feed into your HMRC reporting
The forms you complete depend on the size and complexity of the estate.
Form IHT205 was replaced from 1 January 2022 for deaths on or after that date. For “excepted estates” that do not need a full IHT account, the executor now simply provides the value figures on the probate application (PA1A or PA1P). There is no separate HMRC form to submit for those estates.
Foreign assets, lifetime gifts and trust interests do not automatically disqualify an estate, which is a common misunderstanding. Each has a limit. For a low value excepted estate the gross value must not exceed the available nil-rate band, foreign assets must not exceed £100,000, chargeable lifetime gifts must not exceed £250,000, and property in a single trust must not exceed £250,000. A gift with reservation of benefit does rule the estate out at any value.
There is also a second category that is frequently missed. An exempt excepted estate is one where the bulk passes to a spouse, civil partner or charity: the gross value can be up to £3 million, provided the net qualifying value after those exemptions stays within the nil-rate band. So a £1.5 million estate passing entirely to a widow can still be excepted.
Where the estate falls outside these categories, the executors must complete form IHT400 and send it to HMRC before applying for probate.
Two deadlines catch executors out here, so build them into your timetable. Inheritance tax is due by the end of the sixth month after the month of death, and interest runs after that. And where an IHT400 is needed, HMRC issues a unique code that you must have before you can submit the probate application, normally within 20 working days of receiving the account or the payment, whichever is later.
The inheritance tax threshold is £325,000 per person for the 2026/27 tax year, and the freeze at £325,000 runs until 5 April 2031. Anything above the available threshold is usually taxed at 40%.
The residence nil-rate band of up to £175,000 per person in 2026/27 applies only where a home passes to a direct descendant. Combined with the standard nil-rate band, one person can therefore pass up to £500,000 free of IHT, or up to £1,000,000 for a couple, where qualifying conditions are met. The condition most often missed is the taper: the residence nil-rate band reduces by £1 for every £2 by which the estate exceeds £2 million, so larger estates lose it.
Recent changes affecting certain estates
Two significant changes took effect in April 2026 and are worth noting.
From 6 April 2026, Agricultural Property Relief and Business Property Relief give 100% relief only on the first £2.5 million of combined qualifying assets per person, with 50% relief above that level rather than none. The £2.5 million allowance is transferable between spouses and civil partners, so a couple can have up to £5 million.
In addition, pension reform from April 2027 will bring most pension death benefits into the IHT estate. Pension assets are generally outside the estate for IHT purposes until then, but executors dealing with estates where pensions feature should take specialist advice in good time.
Why getting the figures right matters
Accuracy in estate valuation has direct legal and financial consequences. It is not simply a question of good practice.
If the estate is undervalued, inheritance tax may be underpaid. Interest currently accrues at HMRC’s late payment rate of 7.75% from the due date until payment. Penalties may also apply where HMRC considers a figure to have been unreasonable. Conversely, overvaluing the estate can mean the estate pays more tax than is necessary.
An incorrect valuation can result in overpayment of inheritance tax, underpayment and potential penalties, interest charges, disputes between beneficiaries, and delays in estate administration.
Executors carry personal responsibility for the figures they submit. Keeping clear records and evidence of how valuations were reached is therefore essential. A RICS valuation for property, or a specialist probate valuation for chattels and personal possessions, provides documented evidence that HMRC and the courts accept.
Common challenges executors face
Even where estates appear straightforward, problems can arise. Assets held with different institutions are sometimes missed. Property valuations can be a source of difficulty, particularly where markets moved significantly around the date of death.
Liabilities are also sometimes underestimated. Informal arrangements or older debts may not be obvious from paperwork alone. In other cases, executors rely on rough estimates rather than formal valuations, which creates problems if those figures are later questioned.
A methodical approach, and enough time to gather accurate information, makes a significant difference.
When professional support is worth considering
There is no legal requirement to instruct a solicitor. Many executors manage probate themselves, particularly where the estate is modest and straightforward.
However, professional input is worth considering for estates involving property, higher values, or complex financial arrangements. The same applies where there is uncertainty about IHT, or where beneficiaries may disagree about valuations or entitlements.
A balanced approach often works well. You may choose to handle certain aspects yourself while seeking advice where it adds the most value. If you would like to explore your options, you can compare quotes from three probate solicitors.
Bringing it all together
The gross and net values of an estate are two sides of the same calculation, but they serve different purposes. The gross value captures everything the person owned. The net value reflects what remains after liabilities have been taken into account.
Both are required for probate. Both must be calculated with care. Starting with a clear asset list, working through accurate valuations, and then identifying liabilities carefully will help you move through the process with confidence.
Frequently asked questions
What is the difference between the gross and net value of an estate for probate?
The gross value is the total worth of everything the deceased owned at the date of death, before any deductions. The net value is what remains after debts, liabilities, and certain expenses, such as mortgages, loans and funeral costs, have been taken away. Both figures are required for probate. The gross value is used to work out whether the estate is excepted from a full HMRC account, and the net value is the figure the £5,000 court fee threshold is tested against. Neither is the figure inheritance tax is charged on: that is the net qualifying value, after exemptions and reliefs.
Which value decides the probate application fee?
The net value, not the gross. Where the net estate is £5,000 or less there is no court fee. Above that, the fee is a flat £526 from 13 July 2026, however large the estate is. An estate with substantial assets but equally substantial debts can therefore fall below the threshold and pay nothing.
Do I need a professional valuation for property in a probate estate?
Not as a requirement. HMRC asks for the open market value at the date of death and accepts a valuation from an estate agent or a chartered surveyor. A RICS Red Book valuation is not compulsory, but it is the most defensible evidence and is worth having where inheritance tax is payable or the figure is close to a threshold. A written estate agent valuation is acceptable for simpler cases, provided it states the open market value at the date of death.
Which HMRC form do I need for an estate valued above £325,000?
For deaths on or after 1 January 2022, the IHT205 form no longer applies. Excepted estates, broadly those below the relevant IHT threshold with no complex assets, now declare values directly on the probate application form (PA1P or PA1A). Estates that are not excepted must complete form IHT400 and send it to HMRC before applying for the grant. Note that an estate over £325,000 is not automatically outside the excepted rules: where the excess passes to a spouse, civil partner or charity, the exempt excepted estate category allows a gross value of up to £3 million.
This article is for general guidance only and does not constitute legal, tax or financial advice. Rules and thresholds can change and every estate is different. For advice on your own circumstances, speak to a qualified professional. You can book a free legal consultation through The Probate Network.
