Quick Answer
Probate is the legal process that gives executors the right to deal with someone’s estate after they die. Inheritance tax (IHT) is charged at 40% on the value of an estate above £325,000, although a further £175,000 is available when a home passes to children or grandchildren, and unused allowances can pass between spouses. Property is often the largest asset in an estate, and it must be valued at its open market value on the date of death. HMRC can challenge that figure, so an independent RICS valuation is the safest starting point. Commercial property generally does not qualify for Business Relief, and from April 2027 most unused pensions will also count towards the estate.
Why This Matters for Property Owners
When someone dies, their family is often left dealing with grief and paperwork at the same time. For many estates, the biggest and most complicated asset is property: a family home, a let shop, an industrial unit or a small portfolio.
Getting the value right affects how much tax is paid, how quickly probate is granted and how fairly the estate is shared. At Rory Mack Associates, we’ve been providing probate valuations across Stoke-on-Trent and Staffordshire since 1992, and we see the same problems come up time and again. This guide explains the process in plain English.
This guide is general information, not legal or tax advice. Always speak to a solicitor or tax adviser about a specific estate.
What Is Probate?
Probate is the legal right to deal with a person’s estate. It allows executors to sell or transfer property, close bank accounts, pay debts and distribute what’s left.
If there’s a will, the named executors apply for a grant of probate. If there’s no will, a close relative applies for letters of administration and becomes the administrator.
The probate process, step by step
- Value the estate. List and value everything the person owned, including property, savings, investments and possessions, along with any debts.
- Report to HMRC and pay any inheritance tax. Most IHT must be paid before probate is granted, or at least a first instalment.
- Apply for probate. Most applications are made online through gov.uk. The fee is £300 for estates worth more than £5,000.
- Collect assets and pay debts. Once the grant arrives, the executors can sell or transfer assets and settle any bills.
- Distribute the estate. What’s left is passed to the beneficiaries under the will, or under the rules of intestacy if there’s no will.
When probate isn’t needed
Probate may not be needed if the estate is small, or if assets were held jointly and pass automatically to the surviving owner, such as a home owned as joint tenants. Any property in the deceased’s sole name usually needs a grant before it can be sold.
What Is Inheritance Tax?
Inheritance tax is a tax on the estate of someone who has died. The standard rate is 40% on anything above the tax-free allowances.
Current thresholds (2026/27)
| Allowance | Amount | Notes |
| Nil-rate band | £325,000 | Frozen until April 2031 |
| Residence nil-rate band | £175,000 | Only when a home passes to direct descendants; reduced for estates over £2 million |
| Combined for a couple | Up to £1 million | Unused allowances can pass to a surviving spouse or civil partner |
Everything left to a spouse, civil partner or charity is usually exempt.
A real-world example
Picture a Staffordshire landlord who has died. His estate includes:
- A home worth £350,000, left to his children
- A let industrial unit worth £400,000
- Savings of £100,000
That’s an estate of £850,000. His nil-rate band and residence nil-rate band together cover £500,000, leaving £350,000 taxable at 40%: a bill of £140,000.
If his late wife’s allowances had gone unused, his executors could have claimed those as well, raising the tax-free amount to £1 million. In that case, there would be no inheritance tax to pay at all. It’s a big difference, which is why the details matter.
What Changed in April 2026, and What’s Coming in 2027
Business and agricultural relief
From 6 April 2026, 100% Business Relief and Agricultural Relief is capped at £2.5 million of qualifying property per person. Anything above that gets 50% relief, which means an effective tax rate of 20%. Unused allowance can pass to a surviving spouse.
This is the point many landlords miss. Business Relief is for trading businesses, not investments. A business that mainly lets property usually doesn’t qualify, so a portfolio of let shops or industrial units is normally taxed in full. A building your own trading business uses for its operations may qualify, so get advice on which applies to you.
Pensions from April 2027
From 6 April 2027, most unused pension funds and death benefits will count towards an estate for inheritance tax. This is important for business owners who hold commercial premises in a SIPP or SSAS, as the property inside the pension could become part of the IHT calculation.
The Autumn Budget on 28 October 2026 made no changes to inheritance tax rates or allowances.
Why the Property Valuation Matters So Much
Executors must report each property at its open market value on the date of death. That sounds simple, but it’s where many estates run into trouble.
HMRC can challenge the figure
HMRC often refers property values to the Valuation Office Agency for review. If the figure looks too low, it can be challenged, and the estate may face extra tax, interest and even penalties for careless reporting. An estimate from an online tool or a quick market appraisal won’t stand up to that scrutiny.
Commercial property is harder to value
A house can be compared with similar sales on the same street. A let commercial building depends on the lease, the tenant, the rent and the yield, so it needs a surveyor who understands commercial investments. Our guide to property valuations explains the different types.
Selling for less can bring a refund
If the executors sell property for less than its probate value within four years of death, they may be able to claim back some of the inheritance tax. This is known as loss on sale relief. An accurate valuation at the start helps support that claim.
Paying Inheritance Tax
- When: IHT is due by the end of the sixth month after the person died. Interest is charged after that.
- Who pays: the executor or administrator, using money from the estate. Banks can often release funds directly to HMRC.
- Instalments: IHT on property can be paid in equal yearly instalments over 10 years, which helps if the estate is “asset rich, cash poor” and the family doesn’t want a forced sale.
Gifts and Planning Ahead
You can reduce a future IHT bill by planning ahead:
- The seven-year rule. Gifts are usually free of IHT if you survive seven years. Where a gift exceeds the nil-rate band and you die between three and seven years later, taper relief reduces the tax.
- Annual exemption. You can give away £3,000 a year tax-free, and carry forward one unused year.
- Regular gifts from income. These are exempt if they come from surplus income and don’t reduce your standard of living.
- Gifting property. Giving away a building but still using it or collecting the rent usually counts as a “gift with reservation”, so it stays in your estate. Gifting property can also trigger capital gains tax, so take advice first.
Our guide to commercial property tax planning before year-end covers the wider tax picture for owners.
Summary
Probate gives executors the legal right to deal with an estate, and inheritance tax is charged at 40% above the available allowances. Property usually makes up most of an estate’s value, so it must be valued accurately at the date of death, ideally by an RICS-registered surveyor whose figure will stand up if HMRC asks questions. Let commercial property rarely qualifies for Business Relief, and from April 2027 pensions will also count towards the estate, so planning ahead has never mattered more.
If you’re an executor and need a probate valuation for residential or commercial property, call Rory Mack Associates on 01782 715725 or get in touch online.
Frequently Asked Questions
Do I need a professional valuation for probate?
It isn’t a legal requirement, but it’s strongly recommended. HMRC can challenge any value it thinks is too low, and an independent RICS valuation gives the executors a defensible figure. For commercial property, it’s essential.
Does commercial property qualify for Business Relief?
Usually not if it’s let as an investment, because Business Relief is for trading businesses. A building used by the deceased’s own trading business may qualify for relief, so take advice on the specific property.
How long does probate take?
It varies, but many straightforward applications take several weeks to a few months once HMRC has been notified. Estates with property, IHT to pay or a missing will can take much longer, so start gathering valuations early.
Can inheritance tax be paid before the property is sold?
Yes. The tax on property can be paid in 10 annual instalments, so the family doesn’t have to sell straight away to fund the bill. Interest may be charged on the outstanding amount.
What happens if property sells for less than its probate value?
If it’s sold within four years of death for less than the value declared, the executors may be able to claim loss on sale relief and reduce the inheritance tax paid. A good valuation and evidence of a proper marketing campaign support the claim.
