Probate and Inheritance Tax Valuations
A Probate valuation is carried out on a property which forms part of a deceased person’s estate, where inheritance tax will need to be paid.
At Samuels Surveyors & Valuers, we have many years of experience of providing Probate Valuations on Residential property for IHT (Inheritance Tax) purposes. Our fully experienced RICS property surveyors will prepare an accurate valuation which will be supplied to you as a written probate report and fully compliant with HMRC Inheritance Tax law and reduce the risk of the district valuer intervening.
For the purposes of Probate the property’s value is based upon the open market value of the property in a sale by a willing seller to a willing buyer (section 160 Inheritance Act 1984) at the date of death.
Section 7 of the Inheritance Tax Act 1984 (IHTA) provides for the rates of IHT to be set out in a table in Schedule 1 to that Act. HMRC recently updated the Policy paper 9th December 2015.
Those likely to be affected would be individuals with direct descendants who have an estate (including a main residence) with total assets above the Inheritance Tax (IHT) threshold.
The standard Inheritance Tax rate is 40%. It's only charged on the part of your estate that's above the threshold.
For Example: Your estate is worth £500,000 and your tax-free threshold is £325,000. The Inheritance Tax charged will be 40% of £175,000 (£500,000 minus £325,000).
The Probate Valuation & submitting to HMRC
The Probate Valuation is normally sent to you so that you may have further discussions with your professional advisors (Chartered Accountant – Solicitor). The Valuation will be considered by the District Valuer’s office. If in agreement, HMRC will calculate your tax burden taking into account the various allowances which you may be entitled to benefit from.
However, we cannot provide any warranty that this Valuation will be accepted by the District Valuer / HMRC (Her Majesty’s Revenue and Customs) as it may be subject to a negotiated settlement with the Valuation Office, which could lead to a different figure being agreed with HMRC.
Once the return has been submitted, the District Valuer at the Capital Taxes Office will consider the valuation given. If they believe that the value is too low the person who submitted the return will be asked to defend the value given. The solicitor acting will turn to the estate agent and ask them to justify their valuation directly to the District Valuer. This situation may arise, for example, if the property is sold for considerably more than the value given in the return just a short period after the date of death