Valuing Shares and Investments for Probate: The HMRC Rules
Every share, ISA, unit trust, and investment bond in the estate must be valued at the date of death. HMRC has specific rules for each asset type — getting them wrong can attract penalties or delay probate.
Valuation Method by Asset Type
| Asset | Valuation method | Source | IHT schedule |
|---|---|---|---|
| Listed UK shares and gilts | Quarter-up rule from SEDOL closing prices | HMRC share valuation tool / stockbroker | IHT411 |
| Unlisted / private company shares | Negotiation with HMRC SAV team | IHT412 + company accounts | IHT412 |
| Stocks and Shares ISA | Bid price of underlying assets | ISA provider date-of-death valuation | IHT411 |
| Cash ISA | Closing balance on date of death | ISA provider / bank | IHT411 |
| Unit trusts / OEICs | Bid (selling) price on date of death | Fund manager | IHT411 |
| Investment bonds | Surrender value on date of death | Insurance company | IHT411 |
| Premium Bonds | Total value held | NS&I | IHT411 |
| AIM shares | Quarter-up rule (listed); AIM IHT exemption checked separately | HMRC tool / broker | IHT411/412 |
Quarter-Up Rule: Worked Example
Shares quoted at 200p–208p in the SEDOL on the date of death:
Lower price: 200p
Higher price: 208p
Difference: 8p
Quarter of difference: 8p ÷ 4 = 2p
Quarter-up value: 200p + 2p = 202p per share
If 1,000 shares held: estate value = 1,000 × 202p = £2,020
Frequently Asked Questions
How are listed shares valued for probate and IHT?
Listed shares (shares quoted on a recognised stock exchange, such as the London Stock Exchange) are valued using HMRC's 'quarter-up' rule — the official statutory valuation method for IHT under s272 IHTA 1984. The quarter-up rule: take the lower of the two prices shown in the Stock Exchange Daily Official List (SEDOL) for the date of death (these are the 'closing prices' — the lower and higher figures shown), and add one quarter of the difference between the two prices. Formula: Value = Lower price + (¼ × (Higher price − Lower price)). Alternatively: Value = Lower price + ¼ × (Higher − Lower). Example: shares quoted at 200p–208p. Quarter-up value = 200 + ¼ × (208 − 200) = 200 + 2 = 202p. HMRC provides a free Share and Assets Valuation tool at gov.uk where executors can enter the share details and dates to get the quarter-up value. If the stock exchange was closed on the date of death, you use the prices from the nearest dealing day (the day with the lower values if two days surround the closure).
What about shares in unlisted or private companies?
Unlisted shares (shares in private companies not quoted on a recognised exchange) cannot be valued using stock exchange prices. They must be valued by negotiation with HMRC's Shares and Assets Valuation (SAV) team. The executor submits a form (usually IHT400 Schedule IHT412 for unlisted shares) with details of the company: accounts, turnover, profits, assets, nature of business, and comparable quoted companies if relevant. SAV then negotiates a value. For a minority shareholding: a discount for lack of marketability and lack of control may be applied (though note the related property rules under s161 IHTA 1984 if a spouse holds shares in the same company). For a majority or controlling shareholding: typically valued at net asset value or earnings multiple, whichever is higher. Important: SAV can take several months to reach a conclusion. This may delay probate if IHT cannot be calculated without the share value.
How are ISAs, unit trusts, and OEICs valued for probate?
ISAs (Individual Savings Accounts): the ISA wrapper does not affect valuation for probate purposes — the underlying investments are valued at their date-of-death bid price (selling price). Contact the ISA provider for a date-of-death valuation. For a Stocks and Shares ISA, this is the value of the underlying fund or shares. For a Cash ISA: the closing balance on the date of death. Unit trusts and OEICs: valued at the bid price (selling price) on the date of death. Contact the fund manager for a date-of-death valuation. Investment bonds (with-profits or unit-linked life insurance policies): valued at the surrender value on the date of death, which is the amount the insurance company would have paid out on that date. Contact the insurance company for this figure. Premium Bonds: contact NS&I for the total value held. All these values are reported on form IHT400 Schedule IHT411 (listed stocks and shares) or Schedule IHT412 (unlisted/control holdings).
What is the HMRC online share valuation service?
HMRC provides a free online tool called 'Inheritance Tax: valuing the estate of someone who's died — stocks and shares' at gov.uk. This tool allows executors to: (1) Enter the share name or SEDOL/ISIN code; (2) Enter the date of death; (3) Receive the automatically calculated quarter-up value for that date. The tool draws on Stock Exchange archive data and covers listed shares, gilts, and fixed interest securities. It is the most efficient way to value a large portfolio — listing each holding with its quarter-up value. The tool does not cover unit trusts, OEICs, ISAs (each requires the fund manager's own valuation), unlisted shares, or investment bonds. Print or save the results as evidence for the IHT return — HMRC may request verification of the values used.
What happens to shares in an ISA when someone dies — do they lose the ISA tax wrapper?
When an ISA holder dies, the ISA ceases to be a tax-free environment at the date of death. However: (1) The spouse or civil partner can inherit the ISA using an Additional Permitted Subscription (APS) allowance — they receive a one-off additional ISA allowance equal to the value of the deceased's ISA as at the date of death; (2) This APS allowance can be used to subscribe into an ISA with the same or another provider, keeping the funds sheltered from tax; (3) For other beneficiaries (not the spouse): the ISA is wound up and the proceeds form part of the estate, losing the tax wrapper permanently; (4) Income generated within the ISA continues to be exempt from income tax for up to 3 years after the date of death (or when the estate is administered, if earlier) — this is the 'continuing ISA' treatment introduced in April 2018. The APS is separate from normal ISA subscription limits.
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