Valuing a business for probate means working out the open market value of the deceased's business, or their share of it, as at the date they died, then reporting that figure to HM Revenue and Customs. The business value is normally entered on form IHT413 and submitted with the IHT400 inheritance tax account where tax is due (gov.uk, IHT413, as at August 2026, subject to change).
Open market value means the price the business might reasonably be expected to fetch if sold on the open market on the date of death, not a rushed sale figure and not simply the balance-sheet total. Getting this figure right matters, because it feeds both the value of the estate for probate and any inheritance tax calculation. This guide sets out how the valuation is approached for different kinds of business, how inheritance tax and Business Relief interact with it, and where the figure has to go. Figures are current as at August 2026 and are subject to change.
What does valuing a business for probate mean?
When someone dies, the person dealing with the estate (the executor named in the will, or an administrator where there is no will) has to establish what the estate is worth before applying for a grant of probate. A business interest is part of that estate. Valuing it is the task of arriving at a defensible open market figure for the deceased's stake, whether that is a sole trade, a partnership share, or shares in a company. For an overview of the wider process the valuation feeds into, see our guide to what probate is.
The figure serves two purposes at once. It contributes to the total estate value that decides whether a grant is needed and which reporting route applies, and it forms part of the base on which any inheritance tax is worked out before reliefs are applied.
What counts as the value: open market value at the date of death
Assets in an estate are valued at their open market value on the date the person died (gov.uk, valuing an estate, as at August 2026, subject to change). For a business this is more involved than reading a figure off the accounts, because the going-concern value can differ from the book value of the assets. A valuation generally weighs several things together.
- Net asset value. Business assets such as premises, equipment, stock and cash, less liabilities.
- Goodwill and earnings. What the trade itself is worth, often linked to sustainable profit, which can fall away where the business depended heavily on the deceased.
- The deceased's actual interest. A part share may attract a discount, because a minority holding is worth less proportionately than outright control.
Because these judgements can be contested by HMRC, the reasoning behind the figure is as important as the figure itself.
How different types of business are valued
Sole trader
A sole trade has no separate legal identity, so what passes is the underlying business assets and goodwill less its liabilities. The valuation looks at the net worth of those assets on the date of death, and at whether any goodwill survives the owner.
Partnership interest
Here the estate holds the deceased's share of the partnership, not the whole. The partnership agreement often governs what happens to that share and how it is valued or bought out, so it is usually the starting point, alongside the partnership accounts and any capital and current account balances.
Shares in a limited company
The company is a separate legal person, so the estate owns shares rather than the assets directly. Listed shares are valued using the quoted price on the date of death. Unlisted or private company shares have no quoted price and are valued by reference to the company's assets, earnings and dividends, and to the size of the holding, which is where professional input is most often needed.
Business Relief: how it affects the tax, not the valuation
Business Relief can reduce the value of qualifying business assets that is charged to inheritance tax, in some cases to nil, but it does not change the open market value you report first (gov.uk, Business Relief, as at August 2026, subject to change). The business is valued, that value is entered on the forms, and the relief is then claimed against it.
From 6 April 2026, agricultural property relief and business property relief give 100% relief on the first £2,500,000 of combined qualifying agricultural and business property per person, and 50% relief above that threshold. The £2,500,000 allowance is transferable between spouses and civil partners, giving up to £5,000,000 per couple (gov.uk, Business Relief, as at August 2026, subject to change). Not every business qualifies: businesses consisting mainly of dealing in securities, stocks or shares, land or buildings, or of making or holding investments, are generally excluded. Whether a particular business qualifies, and to what extent, depends on its facts.
The forms and where the business value goes
Where an estate owes inheritance tax, its value must be reported to HMRC within one year of the death using form IHT400 (gov.uk, report the value of the estate, as at August 2026, subject to change). A business interest is set out on a supplementary schedule.
| Form | Purpose |
|---|---|
| IHT400 | The full inheritance tax account, used where tax is due or a full return is required. |
| IHT413 | Supplementary schedule for a business, a partnership interest, or assets used in a business, and for claiming Business Relief. |
| IHT417 / IHT412 | Used for foreign assets and for certain other business or unlisted assets, where relevant to the estate. |
Source: gov.uk (IHT413) and gov.uk (report the value of the estate), as at August 2026, subject to change.
When a professional valuation is worth getting
HMRC allows a professional to be hired to help with valuing an estate (gov.uk, valuing an estate, as at August 2026, subject to change). A formal valuation from an accountant, a chartered business valuer or a RICS surveyor for premises tends to be worth the cost where the holding is substantial, where the shares are unlisted, where a minority discount is in play, or where Business Relief is being claimed and the figures may be examined. A supportable, documented valuation reduces the risk of a later HMRC enquiry and of penalties for an inaccurate return.
- Value the business at its open market value on the date of death (gov.uk).
- Report on form IHT413 with the IHT400 where tax is due; report within one year of death (gov.uk).
- Inheritance tax is due by the end of the sixth month after death (gov.uk).
- Tax on a business can be paid in equal yearly instalments over 10 years (gov.uk).
- Probate application fee: £526 where the estate is over £5,000, and no fee where it is £5,000 or less (gov.uk).
Deadlines and paying the tax
Inheritance tax must be paid by the end of the sixth month after the person died, and HMRC charges interest on tax paid late (gov.uk, paying inheritance tax, as at August 2026, subject to change). Because a business can take time to sell, the tax attributable to it can often be paid in equal annual instalments over 10 years, and this option also applies to unlisted shares that meet the qualifying conditions (gov.uk, yearly instalments, as at August 2026, subject to change). The current probate application fee is £526 where the estate is valued over £5,000, with no fee where it is £5,000 or less (gov.uk, probate fees, as at August 2026, subject to change). Planning the sequence of these steps in advance, ideally as part of a wider estate plan, can reduce pressure on the family later.
Scotland and Northern Ireland
This guide describes the law and process of England and Wales. Scotland uses confirmation rather than a grant of probate, and its succession rules differ, though the same HMRC inheritance tax forms and the open market valuation principle apply across the UK. Northern Ireland has a separate but broadly similar probate system to England and Wales. Where a business or an estate touches more than one jurisdiction, it can be worth taking advice in each.
Frequently asked questions
How do you value a business for probate?
You work out the open market value of the deceased's business interest as at the date of death, weighing its net assets, its goodwill and earnings, and the size of the share held. That figure is reported to HMRC on form IHT413 with the IHT400 where inheritance tax is due (gov.uk, as at August 2026, subject to change). Every business is different, so this is general information rather than advice on a specific estate.
Who can value a business for probate?
The person dealing with the estate can prepare the valuation themselves, or hire a professional to help, which HMRC expressly allows (gov.uk, as at August 2026, subject to change). Accountants, chartered business valuers, and RICS surveyors for any premises are commonly used where the holding is significant or the figures may be examined.
Is a business included in the value of an estate for inheritance tax?
Yes. A business or business interest is part of the estate and is valued at its open market value on the date of death (gov.uk, as at August 2026, subject to change). Business Relief may then reduce the amount charged to tax, but the value is still reported first.
How much inheritance tax is paid on a business?
Inheritance tax is charged at 40% on the part of an estate above the available tax-free thresholds, with a nil-rate band of £325,000 (gov.uk, as at August 2026, subject to change). Qualifying business assets may attract Business Relief of 100% on the first £2,500,000 of combined qualifying business and agricultural property per person from 6 April 2026, and 50% above that (gov.uk, as at August 2026, subject to change). The outcome depends on the estate.
When does the tax on a business have to be paid?
Inheritance tax is generally due by the end of the sixth month after death, though the tax attributable to a business can often be paid in equal yearly instalments over 10 years because it may take time to sell (gov.uk, as at August 2026, subject to change). Interest may apply to instalments.
What form do you use to report a business for probate?
A business, a partnership interest, or an asset used in a business is reported on form IHT413, submitted with the IHT400 inheritance tax account where tax is due (gov.uk, as at August 2026, subject to change). The estate's value must be reported within one year of the death.