A probate valuation is used for probate and Inheritance tax calculations in order to correctly asses the estates tax liabilities. They are required for the purpose of completing the PA1 and IHT application forms. The Value of an item will be based upon the open market value, meaning the price that the items might reasonably be sold for on the open market.
Who is responsible for obtaining professional Valuations?
The executor or administrator of the estate is responsible for providing the correct information to the probate office and HMRC. Ensuring the proper valuation of the estate is one of the main duties of an executor. When a solicitor has been instructed it is part of their responsibility to ensure they have correctly identified and valued the estate when applying for probate on the executor’s behalf.
Final Duties can provide professional probate valuation services to fit a wide range of probate valuations needed for the administration of and estate. Please contact with your probate valuation requirements.
Why do I need a professional probate valuation of house contents and property?
Having professional valuations for property and belongings will help to ensure a smooth and efficient application process. These valuations are used to form evidence of the total value of the estate for tax purposes. Professional Probate evaluations are less likely to be queried by HMRC.
Valuations provided by someone without the relevant or necessary knowledge could result in the over or under valuing of an item. This may lead to HMRC querying the value causing delays to the estate administration and in some cases can result in penalties.
Professional valuations can also be used when calculating tax liabilities on items that have been left as a gift or ‘legacy’ to specific beneficiary.
What kind of Assets would require a probate Valuation?
- Property
A property is often the most expensive asset that a person will own and therefore will make up a large part of the estates total Value. When having a property valued for probate it is important to show you have made reasonable effort to provide an accurate value. When a property is part of an estate a district valuer at the capital taxes office will assess the valuation given. If they believe the value to be incorrect, they will query the application. An executor may be asked to Justify the value by providing the original valuations from the estate Agents, who may also be asked to justify their valuation.
- Possessions of Significant Value
It is important to assess if any items owned by the deceased are of a high value as this can affect the overall total of the estate. Items that may require a professional probate valuation are Jewellery, Antiques, Works of art or collections. Examples listed but not limited to on the IHT 407: Household and personal goods are antique furniture, paintings, sculptures and porcelain, collections of books, stamps, coins, medals and wines. If you have a professional valuation, you would send a copy along with the form.
- Vehicles, boats and aircrafts
You can use comparative market figures to make a reasonable judgement on a cars value. However, it is recommended to have a professional valuation for vintage or collectible cars.
- Household Items (chattel)
You do not need a professional evaluation on household items or personal items with a value of less than £500. An estimated market value, defined by HMRC as a realistic selling price, is sufficient.
What is a Rics Valuation?
A Rics Valuation is a report that is provided by a member of the Royal Institution of Chartered Surveyors (RICS). After surveying the property for probate they will provide a written report which is fully complaint to HMRC Inheritance Tax law. A RICS valuation in most cases is deemed more accurate than other types of valuations and is often less likely to be questioned by the district Surveyor.
When preparing the valuation, the surveyor will take into account the condition of the property as well as compare evidence of recent sales of similar properties in the area.
What is An Estate agents Market Appraisal?
A market appraisal is provided by an estate agent and will make a judgement on the property’s value based upon the condition and what other properties in the area have sold for. Although on smaller estates this may be sufficient for obtaining probate, estates that are close to or over the inheritance tax allowance may benefit from a more detailed valuation. In those cases, it is recommended to obtain a RICS valuation.
Which HMRC forms will require a probate Valuation?
You will need the following forms when dealing with a probate valuation. These forms can be taken from the HMRC website. They can be downloaded or printed.
You will need to attach the professional valuation when filling in these forms and sending them back to the HMRC.
Schedule IHT 404 – Jointly owned assets.
Schedule IHT 405 – Houses, land, buildings and interest in land.
Schedule IHT 407 – For jewellery, vehicles, boats, aircraft, antiques, works of art, or collections
Schedule IHT 408 – This is for household and personal goods donated to charity