How to Value a Business for Probate UK 2026

How do I value a business for probate?

1A professional business valuation by a qualified accountant or business appraiser is essential — HMRC scrutinises business valuations closely.
2Valuation methods include net asset value, earnings multiple (EBITDA), and discounted cash flow — the most appropriate method depends on the business type.
3Business Property Relief (BPR) may reduce the IHT value by 50% or 100% for qualifying businesses — this is one of the most valuable IHT reliefs.
4Sole trader businesses: value assets plus goodwill, minus liabilities.
5Partnership shares and company shares are reported in IHT400 Schedules IHT412 (unlisted shares) or IHT413 (business and partnership interests).

Business interests are among the most complex assets to value for probate. The valuation must be defensible to HMRC and must also take into account the significant relief potentially available through Business Property Relief (BPR). This guide covers valuation methods, BPR eligibility, and how to report business interests in IHT400. For an overview of all assets requiring valuation, see our executor first steps guide.

Types of Business Interest

The type of business interest dictates the valuation approach. Common categories include:

Business Type	What to Value	BPR Rate
Sole trader business	Net business assets plus goodwill, minus business liabilities	100%
Partnership interest	Deceased's capital account plus share of goodwill	100%
Shares in unquoted company (>50% control)	Pro-rata value of company, discounted for minority interest	100%
Shares in unquoted company (minority)	Market value of minority shareholding with minority discount	100%
AIM-listed shares	Quarter-up rule (listed share valuation method)	100% if qualifying
Farmland and farm buildings	Agricultural value (Agricultural Property Relief may apply)	50% or 100% (APR)

Business Property Relief (BPR) — Key Facts

BPR is one of the most generous IHT reliefs available. It can reduce the taxable value of qualifying business property by up to 100%, effectively making the business interest IHT-free.

Qualifying conditions for 100% BPR:

The business must have been owned by the deceased for at least 2 years before death.
It must be a trading business (not mainly investment, holding property, or making investments).
Sole trader businesses, partnership interests, and shares in unquoted companies (including AIM shares in qualifying companies) qualify for 100% relief.

50% BPR applies to: Shares in a quoted controlling company (over 50% of votes), and certain land, buildings, or machinery used in a business owned by a partnership or company in which the deceased had an interest.

BPR does not apply to:Investment companies, property rental businesses, or businesses that are mainly investment in nature. If the business holds significant investment assets (shares, cash) alongside its trading activities, HMRC may restrict BPR using the "excepted assets" rules.

Valuation Methods

A qualified business valuer will choose the most appropriate method. The main approaches are:

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Net asset value (NAV): Total assets at market value minus liabilities. Appropriate for asset-heavy businesses or holding companies.
Earnings multiple: Multiply maintainable earnings (typically EBIT or EBITDA) by a sector-appropriate multiple. Suitable for profitable trading businesses.
Discounted cash flow (DCF): Present value of projected future cash flows. Used for complex or high-growth businesses.
Revenue multiple: Sometimes used for service businesses where profitability is variable.

For most small businesses, a combination of NAV and earnings multiple will be used. HMRC may challenge the method and/or assumptions — a well-documented report from a qualified valuer is essential.

Obtaining a Professional Valuation

Instruct a chartered accountant with business valuation experience, or a specialist business valuation firm. The report should:

Be dated as at the date of death.
State the valuation method used and the rationale.
Include supporting financial information (accounts, forecasts).
Identify any discounts applied (e.g. minority discount) and justify them.
Address BPR eligibility and any "excepted assets."

Reporting Business Interests in IHT400

Business interests are reported in:

Schedule IHT412 — Unlisted stocks, shares, and investments (for shares in private companies).
Schedule IHT413 — Business and partnership interests (for sole traders and partners).
Schedule IHT414 — Agricultural Relief (if Agricultural Property Relief is also claimed).

BPR claims are made in Schedule IHT413. For a full guide to IHT400, see our IHT400 form guide. For the overall IHT position, see our inheritance tax guide for 2026–27. Start your estate administration with our free estate administration tool.

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