How to Value Music or Content Royalties

Music and content royalties are often some of the most valuable — and most misunderstood — assets within a modern estate. Because royalties are intangible, income-based and governed by contracts, they require a specialist approach to probate valuation to ensure accuracy, HMRC compliance and fair distribution between beneficiaries.

With over 12 years of specialist probate valuation experience across England, Scotland and Wales — and with zero HMRC rejections — FEAC Legal regularly values royalty income streams for estates ranging from individual songwriters to complex, multi-platform content creators.

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What Are Music or Content Royalties?

Royalties are payments earned from the use, licensing or exploitation of creative work. In probate, they may include:

• Songwriting and composer royalties
• Recording artist royalties
• Mechanical royalties
• Performance royalties
• Synchronisation (sync) royalties
• Publishing royalties
• Film and television residuals
• Podcast royalties
• Audiobook royalties
• Photography licensing income
• Written content or journalism royalties
• Software or digital content royalties

If royalties generate income or have future earning potential, they form part of the estate and must be valued.

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Why Royalties Must Be Included in Probate Valuations

Royalties affect probate because they:

• Represent intellectual property (IP) rights
• Generate ongoing income after death
• Can significantly increase estate value
• Must be declared to HMRC for inheritance tax purposes
• Often continue for decades, depending on copyright law

Executors are legally responsible for identifying and declaring all royalty-based assets.

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Step 1: Identifying All Royalty Sources

The first challenge is identifying where royalties come from. These may be paid through:

• PRS for Music
• PPL
• MCPS
• Music publishers
• Record labels
• Streaming platforms
• Film and TV production companies
• Stock image libraries
• Book publishers
• Licensing agencies
• Digital distribution platforms

Many estates contain multiple royalty streams, some of which families are unaware of.

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Step 2: Confirming Ownership of Rights

Not all royalties belong fully to the estate. Valuers must establish:

• Whether rights are owned outright
• Whether rights were assigned or licensed
• Percentage ownership of works
• Co-writer or co-creator splits
• Contractual limitations
• Whether rights revert after a set period

Only the portion legally owned by the deceased can be included in the probate valuation.

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Step 3: Reviewing Historical Royalty Income

A professional probate valuation examines:

• Royalty statements
• Payment histories
• Annual income trends
• Fluctuations in earnings
• One-off vs recurring payments

Consistent, long-term income strengthens value, while irregular or declining income may reduce it. HMRC expects valuations to be evidence-based, not speculative.

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Step 4: Assessing Future Income Potential

Royalties often continue long after death. Valuers assess:

• Longevity of copyright (often 70 years after death)
• Ongoing popularity of the work
• Use in film, television or advertising
• Streaming performance
• Back-catalogue strength
• Licensing activity
• Cultural or historical significance

Future income potential is a key factor in determining open-market value.

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Step 5: Understanding Copyright and Legal Duration

UK copyright law plays a major role in valuation. Factors include:

• Type of work (music, literary, visual, digital)
• Date of creation
• Date of publication
• Duration of protection
• Jurisdiction of exploitation

Longer remaining copyright periods generally increase probate value.

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Step 6: Valuation Methodologies for Royalties

There is no single formula for valuing royalties. Depending on the asset, valuers may use:

• Capitalisation of average earnings
• Discounted future income models
• Comparable royalty catalogue sales
• Contract-based valuation
• Asset-based valuation for IP portfolios

The method used must be appropriate, defensible and suitable for HMRC scrutiny.

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Step 7: Platform and Contractual Restrictions

Royalty income is often governed by contracts that affect value, including:

• Termination clauses
• Post-death payment rules
• Reversion rights
• Territory restrictions
• Exclusivity agreements

A probate valuation must reflect what can realistically be transferred or sold, not hypothetical maximum value.

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Step 8: Royalties Linked to Online or Digital Platforms

Many modern royalties are tied to digital platforms, such as:

• Streaming services
• Social media monetisation
• Subscription platforms
• Online licensing libraries

These may overlap with digital assets and online businesses, which FEAC Legal frequently identifies through its free asset recovery service (see our Asset Recovery service).

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Step 9: HMRC Expectations and Executor Risk

HMRC expects royalty income to be:

• Fully disclosed
• Accurately valued at the date of death
• Supported by documentation
• Included in inheritance tax calculations

Failing to include royalties can result in:

• HMRC queries or investigations
• Probate delays
• Penalties for inaccurate reporting
• Executor liability

Professional probate valuation protects executors from these risks.

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Step 10: Royalties in Multi-Beneficiary Estates

Royalties can cause disputes when:

• Income continues after distribution
• Beneficiaries disagree on future value
• One party wants to retain rights
• Others want immediate financial settlement

A formal probate valuation establishes a clear financial figure, supporting fair division or compensation.

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Why Professional Valuation Is Essential for Royalties

Music and content royalties require specialist probate valuation because they:

• Are intangible and income-based
• Depend on copyright law
• Fluctuate over time
• Are governed by complex contracts
• Are often hidden or misunderstood

Accurate valuation ensures transparency, compliance and fairness.

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Why Families Choose FEAC Legal

Executors, solicitors and families trust FEAC Legal because:

• We have over 12 years of specialist probate valuation experience
• Our HMRC-compliant reports have never been rejected
• We understand intellectual property and royalty structures
• We identify income streams others miss
• We provide full photographic and documentary inventories
• We include a free asset recovery service
• We work with private clients, executors and solicitors
• We cover England, Scotland and Wales

Royalties are long-term financial assets — and they must be valued correctly.

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Contact FEAC Legal

Email: admin@feaclegal.co.uk
Phone: 07984733931
To make an enquiry or request a valuation, please contact us.