What is probate value, and why does it matter for Capital Gains Tax? Probate value is the open market value of each asset on the date someone died, as reported to HMRC when the estate is valued. It matters because that figure becomes the starting cost for Capital Gains Tax. When the executors or beneficiaries later sell the asset, CGT is only due on any increase above the probate value.
There is no Capital Gains Tax on death itself. Any gain built up during the deceased’s lifetime is wiped out, and the clock restarts at the probate value. That makes the valuation one of the most important numbers in the whole estate: too low and the beneficiaries face a larger CGT bill when they sell, too high and the estate may pay more Inheritance Tax. For the official rules, see GOV.UK’s guidance on tax on property, money and shares you inherit.
This guide explains how probate value is set, how it is used to calculate CGT, and what happens if the property sells for more or less than the probate value.
How Probate Value Is Worked Out
Executors must value everything the deceased owned, less their debts, as at the date of death. HMRC’s guide to valuing the estate of someone who has died sets out the process. In practice, the probate value of the main assets is usually set as follows:
- Property and land: a formal valuation by a RICS registered surveyor is the safest approach, especially where the property may be sold later.
- Bank and savings accounts: the balance on the date of death, including interest due.
- Listed shares and funds: their market price on the date of death.
- Personal possessions: what they would sell for on the open market, not their replacement cost.
If Inheritance Tax is payable, the estate is reported on form IHT400 and the probate value is agreed with HMRC. If no Inheritance Tax is due, the values are still reported, but HMRC may not formally agree them and can challenge them later when a CGT return is filed.
Why Probate Value Becomes Your CGT Base Cost
For Capital Gains Tax, personal representatives are treated as acquiring the deceased’s assets at their market value on the date of death. Beneficiaries who inherit the assets take over that same value. This is often called the uplift on death.
Where the value has been formally agreed for Inheritance Tax purposes, that agreed probate value must also be used for CGT. This stops executors from using a low value to save Inheritance Tax and a high value to save CGT. Our guide to CGT on inherited property explains the wider rules.
Worked Example: Selling a House Above Probate Value
Margaret died in March 2025. Her house had a probate value of £300,000. Her executors sell it in October 2026 for £330,000, paying £6,000 in estate agent and legal fees.
If the executors sell
Gain: £330,000 − £6,000 − £300,000 = £24,000.
Personal representatives receive a £3,000 annual exempt amount for the tax year of death and the next two tax years, so it is still available in 2026/27.
£24,000 − £3,000 = £21,000 × 24% = £5,040.
If the house is first passed to two beneficiaries who then sell
Each beneficiary has a gain of £12,000. Both are basic rate taxpayers with enough unused basic rate band, and each has a £3,000 annual exemption.
£12,000 − £3,000 = £9,000 × 18% = £1,620 each.
Total: £3,240, saving the family £1,800.
Transferring assets to beneficiaries before a sale needs to be handled carefully and documented properly, but it is often worth considering. See how capital gains are calculated on inherited property for more examples.
What Happens If the Sale Price Is Higher Than Probate Value?
If the property sells for more than its probate value, the increase is a capital gain. Whether tax is payable depends on the size of the gain after costs and the annual exempt amount. The executors pay 24% on taxable gains, while beneficiaries pay 18% or 24% depending on their income.
For UK residential property, the sale must be reported and the tax paid within 60 days of completion. Read our guide to reporting UK property CGT in 60 days.
A sale price well above probate value soon after death can also prompt HMRC to ask whether the original valuation was too low. This is one reason a professional valuation at the date of death is so important.
What Happens If the Sale Price Is Lower Than Probate Value?
If the property sells for less than its probate value, there are two possible reliefs:
| Relief | How it works | Time limit |
|---|---|---|
| Capital loss for CGT | The loss can be set against other gains of the same person | Executors’ losses cannot be passed to beneficiaries |
| Inheritance Tax loss on sale of land | The lower sale price replaces the probate value, reducing Inheritance Tax | Sale within 4 years of death (form IHT38) |
| Inheritance Tax loss on sale of shares | The lower sale price replaces the probate value for quoted shares | Sale within 12 months of death |
The Inheritance Tax relief is only useful where Inheritance Tax was paid on the estate. HMRC’s IHT38 claim for loss on sale of land explains the conditions. See also our guide to using capital losses.
Probate Value, Inheritance Tax and CGT Working Together
Probate value links two taxes. A higher valuation increases the estate for Inheritance Tax, which is charged at 40% above the available nil-rate bands. A lower valuation reduces Inheritance Tax but increases the gain when the asset is sold.
Where no Inheritance Tax is due, it can be tempting to use a generous probate value to reduce future CGT. HMRC can challenge any value that is not a genuine open market value, and penalties apply to careless or deliberate errors. The right approach is an accurate, independent valuation. Read more about Inheritance Tax property changes and the current Capital Gains Tax rates.
Getting Specialist Help With Probate Value and CGT
Executors are personally responsible for reporting the estate’s tax correctly. Choosing who sells, when to sell and whether to transfer assets to beneficiaries first can make a large difference to the total tax paid by the family.
Our ACCA-qualified team at Capital Gains Tax Experts reviews probate values, calculates CGT for executors and beneficiaries, claims every relief, and files the 60-day return on time. For ways to reduce the tax on an estate, see our guide to capital gains tax on a deceased estate.
Frequently Asked Questions
Do you pay capital gains tax on probate?
No. There is no Capital Gains Tax when someone dies or when probate is granted. CGT only arises if the executors or beneficiaries later sell an inherited asset for more than its probate value, and the gain exceeds the £3,000 annual exempt amount.
What happens if the sale price is higher than the probate value?
The difference, less selling costs, is a capital gain. Executors pay 24% on taxable gains after their £3,000 annual exemption. Beneficiaries who inherit first and then sell pay 18% or 24% depending on their income. UK property gains must be reported within 60 days of completion.
Do I have to pay capital gains tax on a deceased estate?
Only if assets rise in value after the date of death and are then sold. The executors pay CGT on gains made while they administer the estate, and beneficiaries pay CGT on gains after the assets pass to them. Gains made during the deceased’s lifetime are not taxed.
How do you calculate the value of an estate for probate?
List everything the deceased owned on the date of death, including property, bank accounts, investments and possessions, at their open market value. Deduct debts and funeral costs. The total is reported to HMRC, and if Inheritance Tax is due, it is reported on form IHT400.
Does a deceased person have to pay capital gains tax?
Death itself does not trigger Capital Gains Tax. However, if the person sold assets during the tax year before they died, any CGT on those sales must be reported on their final tax return and paid from the estate.
Conclusion
Probate value is far more than a figure on a form. It sets the base cost for every future Capital Gains Tax calculation on inherited assets, and it is closely linked to the Inheritance Tax the estate pays.
An accurate professional valuation at the date of death, careful decisions about who sells, and full use of reliefs for any loss on sale can save families thousands of pounds.
If you are dealing with an estate and want certainty on probate value and CGT, contact our team at Capital Gains Tax Experts. Call us on +44 (0)1204 859315 or try our free CGT calculator to get an instant estimate.
