When someone passes away holding shares in a privately owned UK company, the executors of the estate must report the open-market value of those shares on form IHT400 (with detail on supplementary form IHT412). Section 160 of the Inheritance Tax Act 1984 defines that value as the price the asset would fetch on the open market at the date of death, assuming a willing buyer and a willing seller.
When is a probate valuation required?
- IHT400 submission for unquoted private company shares.
- Minority family holding requiring open-market value with discounts for lack of control and marketability.
- Business Property Relief (BPR) reviews where the qualifying status of the shares must be evidenced.
- Estate distribution where one beneficiary takes the shares and others receive cash.
Our methodology
We apply earnings multiples for trading companies, net asset value for asset-rich businesses, and discounted cash flow as a cross-check where forecasts are reliable. We then apply evidenced discounts for lack of control and lack of marketability calibrated to restricted-stock studies and the rights set out in the articles and shareholders' agreement.
Timeline & deliverables
Standard an agreed timeline confirmed at engagement. Deliverables include the independent valuation report, comparables and discount evidence, and a summary letter suitable for solicitors and HMRC enclosure.
Delivered under our Shareholder Valuation service. Optival provides independent valuation advice and is not a regulated tax adviser.