10 Dec 21 by Lesley Anderson



A famous quote by Benjamin Franklin states, “in this world, nothing is certain except death and taxes.” Unfortunately, that is as true today as it was 1789 -making it even more important to understand probate valuation and IHT.

The global pandemic took a lot of lives and the people left behind struggling with the situation, grief, and the seemingly never-ending paperwork, quickly realised that at the worst of times, death and taxes come hand in hand.

One of the things that we tend to forget about, is that on our passing, although having a will is paramount, the property we leave behind will usually be the biggest asset and this is likely to be the difference between our loved ones paying Inheritance Tax (IHT) or not.

As with most things tax related, the process can be quite intimidating at such a stressful time.

This is a brief outline of what to expect and how to ease the process:

When someone passes a person or persons will have been elected to be ‘executors’, this may be a loved one, family friend or legal professional and not necessarily a beneficiary. It should be noted that until processed beneficiaries do not have rights to any goods or chattels from the loved one’s estate, even if left the item in the will. Until the will is read and processed and confirmed by the executor(s) these goods do not pass over ownership.

First the entire estate must be valued. This includes money, goods/assets/possessions, and property. This valuation must be done whether the estate is being kept by family or sold.

Probate Valuation

The valuation figure known as Probate Valuation is conducted as at the date of passing not at the date concluded. This is submitted to HMRC to determine if the estate is valued above the Inheritance Tax Threshold which is currently set at £325,000.

If the total is below this figure, IHT is not required, however, if over this figure, IHT will be payable. As always, to complicate matters, there are certain exemptions, and we would advise that you discuss these with your legal advisor.

For example:

A spouse/civil partner of the deceased who has been left everything in the Will and is a permanent resident of the UK would not be required to pay IHT.

We must note however, we are not legal professionals and first and foremost we would highly recommend that you retain the services of a legal professional who understands the limitations and exemptions that are available to you.

Probate Valuation and IHT

At present the IHT standard tax rate is 40%. This will be changed on everything over the threshold which applies to you. For example, if the estate is values at £400,000 and your threshold is £350,000 tax will be paid on the £50,000 above this threshold which equates to £20,000.

A property does not have to be valued by a Chartered Valuer and can be valued by an estate agent; however, it is more likely to be investigated by HMRC if a non-RICS accredited valuation is supplied.

A valuation can be disputed by HMRC if they believe that the valuation provided seems too low or inconsistent with other valuations locally. In these situations, a statement is required from the valuer to explain any differences of if the valuation was not conducted by a RICS accredited Valuer a new valuation can be requested.  If the HMRC find that the value has purposely been adjusted to limit IHT payable a 100% fine of the difference can be made on the executor/beneficiaries.

Situations where valuations did not reflect the eventual achieved selling price are not uncommon and have been seen during the last two years of Covid lockdowns with rapid house price increases from unprecedented high demand.

Vickery Holman have a team of experienced RICS accredited surveyors across the southwest who undertake probate valuations and work closely with many legal companies and professionals to offer seamless advice and support during the most difficult of times.

If Vickery Holman can assist you in a probate valuation or Asset Valuation for other tax purposes, please contact us directly on: Jtyas@VickeryHolman.com