Probate Valuations
WHAT IS PROBATE?
Probate is the legal authority to deal with assets which were owned by someone who has died. HMRC will often require a Valuation report to be provided before probate can be granted. This determines the tax that will be payable.
Please be aware that the tax is calculated using the probate valuation. If you decide to sell the property, it will often be the probate valuation which is considered, more so than the amount the property sells for. However, each case at HMRC is different, and they may take the final sale price if it is over the valuation figure. The valuation figure helps you get over the hurdle of marketing the property prior to sale and the sale being held up by HMRC.
Understanding Probate Valuations
WHAT IS INHERITANCE TAX?
When someone dies, their estate may have to pay tax on its assets. This normally also includes money, property, shares and other possessions.
Inheritance tax is payable if the total value of an estate exceeds £325,000. There are, however, a few exceptions, such as where proceeds are left to a spouse or a charity.
You may have been told by your Solicitor dealing with Probate, or seeking a Grant of Representation, that you need a Market Valuation Report by a RICS Registered Valuer to help them gain probate. It may be that you are the executor or beneficiary and are looking and how to expedite the process so that probate is not held up. A Red Book compliant Market Valuation report by a member of our team is a very important step towards this.
WHAT IS A PROBATE VALUATION?
To determine how much tax is payable, the Market Value of property on the date of death needs to be established. This helps calculate the total value of the estate.
This is known as an Inheritance tax valuation or valuation for probate. As RICS Registered Valuers, we can produce the probate valuation report for the property in our local area.
In recent years, HMRC have become more vigilant in their requirements for a Market Valuation. Their advice now is for a report to be undertaken by a RICS Registered Valuer and for it to be compliant with the Red Book (RICS Valuation Standards), which is the standard of reporting by the Royal Institution of Chartered Surveyors.
Dealing with the death of any loved one is incredibly difficult, and one of the last things many people wanting to be thinking about is how to satisfy HMRC what the value of property held in the Estate is. If you are dealing with an Estate because of the sudden, unexpected death of a loved one for any reason, it is undoubtedly very hard, just like with a number of other conditions.
What If I don’t want to sell?
If you inherit a property and decide not to sell, a valuation report will still be required if the total value of the estate may reach £325,000 or more. That includes both property and other assets.
So who needs to get a Valuation report?
If you are a personal representative of the deceased, such as an executor or administrator of the estate, you are responsible for securing an accurate valuation of the estate. The Valuation can be challenged by HMRC, with penalties applied onto the Executors if they are negligent in how they obtained a property valuation.
Without the valuation report, an Executor or Administrator may not gain authority to sell the property.
What needs to be compliant?
Our reports are compliant with both Section 160 of the Inheritance Tax Act 1984 and also the RICS Red Book. We are thorough and evidence our findings sufficiently to mitigate any risk of challenge by HMRC
UK Government Inheritance tax calculator.
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