How to Avoid Overpaying Inheritance Tax on an Estate
When Justine Fernandes and her brother began sorting through their mother's estate after her death, they did what many grieving families do: they estimated what everything was worth, submitted those figures to HMRC, and paid their inheritance tax bill. The total came to £8,000. The problem was that the correct bill should have been just £1,400. They had overpaid by £6,600 — not through dishonesty, but through the very common mistake of overvaluing household belongings based on sentiment rather than market reality. Their story, published this week by Which?, is far from unusual.
Why Probate Valuations So Often Go Wrong
Research by Swift Values found that over 80% of people overestimate probate values when handling a loved one's estate. The gap between what families expect and what items are actually worth can be considerable.
An antique clock estimated at £1,000–£2,000 turned out to be worth £320. A diamond ring that a family expected to fetch over £4,000 was valued at £1,250. A washing machine estimated at £200–£400 had a realistic resale value of just £40. These are not outliers — they illustrate a consistent pattern.
The reason is understandable. People value items based on what they'd cost new, what they paid for them years ago, or what they mean emotionally. But HMRC's probate valuation requirement is based on "open market value" — what a willing buyer would pay a willing seller for the item in its current condition. That figure is almost always significantly lower than the sentimental estimate.
Because inheritance tax is charged at 40% on the value of an estate above the nil-rate band (currently £325,000, or up to £500,000 when a residential property passes to direct descendants under the residence nil-rate band), an overvalued estate directly translates into an inflated tax bill.
How to Value an Estate Correctly from the Start
Getting probate valuations right from the outset avoids an unnecessary overpayment — and the stress of later corrections. Here are the most important steps:
Residential property: Always obtain a formal RICS "Red Book" valuation. Online estimates and automated tools are not acceptable to HMRC for inheritance tax purposes, and they can be significantly inaccurate in either direction.
Jewellery, art, and antiques: Items with a meaningful value should be formally appraised by a specialist. For jewellery, that means a qualified gemologist or jeweller providing a written report. For paintings, silverware, or collectables, a specialist auction house can provide a pre-sale estimate with a letter confirming current market value.
Everyday household contents: Use realistic resale values — what these items would actually sell for in their current condition, not what they cost new. The most reliable reference is the "sold" listings on platforms like eBay, not current asking prices.
Financial assets: Bank accounts, ISAs, premium bonds, and stocks should be valued as at the date of death. The relevant institutions will provide a date-of-death balance on request; this is a standard process and they are obliged to assist.
What to Do If Your Family Has Already Overpaid
If you believe you have overpaid inheritance tax due to an overvaluation of the estate, a refund is possible. Between April 2022 and April 2025, over 18,000 families filed refund claims with HMRC — evidence that the problem is widespread. You generally have up to four years from the date of payment to submit a correction.
HMRC will pay interest on refunded amounts, although at 2.75% this will not fully compensate for the cost of having tied up money unnecessarily. The sooner a correction is identified, the better.
The process of making an IHT correction involves submitting revised figures to HMRC with supporting evidence — which is where professional help makes a meaningful difference. A probate solicitor can review the original estate accounts, identify where corrections are appropriate, and manage the process with HMRC on your behalf.
It is worth noting that HMRC can also investigate undervaluations, so the goal is accurate valuation, not simply a lower one. A professional valuation provides a defensible, documented position that protects the estate either way.
What Should You Do Next?
Dealing with a loved one's estate is stressful enough without the added worry of whether you've handled the tax correctly. The QualitySolicitors first contact team can connect you with a specialist Wills and Probate solicitor in your area who will guide you through the estate administration process, ensure valuations are handled correctly, and help you avoid — or where necessary, recover — any overpayment of inheritance tax. Reach out today and get the right support from the start.