RICS REgistered
Probate Valuations London
London Probate Valuation Specialist
What is inheritance tax?
When someone dies, they may have to pay taxes on their assets. Inheritance tax is a 40% tax applied after a person dies to assets worth over £325,000.
Inheritance tax is payable if the total value of an estate exceeds £325,000. Property inherited or sold is included in this.
In recent years, HMRC has become more vigilant in its requirements for a market valuation. Their advice now is for a report to be undertaken by a Chartered Surveyor and for it to comply with the Red Book (RICS Valuation Standards), which is the gold standard of valuation reports as decided by the Royal Institution of Chartered Surveyors.
How to value property for probate
If a property has to be valued for the probate process, three options are open to you.
Remember that the 2022 Inheritance Tax rate is 40%, and your tax-free threshold is £325,000.
- SEARCH SIMILAR
Most people opt for the easy solution and search for similar properties in surrounding neighbourhoods to establish a comparable value.
If the value is suspiciously below the £325,000 tax threshold, then HM Revenue & Customs (HMRC) could challenge that figure.
We would recommend using a RICS Chartered Surveyor, such as ourselves.
- ACQUIRE 3 VALUATIONS
A second option is to obtain three valuations from local estate agents to establish a relative average value when submitting probate and tax forms.
We would recommend using a RICS Chartered Surveyor, such as ourselves.
- USE A RICS SURVEYOR
The safer method is to use a qualified RICS property surveyor. They will offer a more realistic valuation than one from an estate agent and consider any repairs required before the house can be marketed.
Surveyors can also advise on property renovation or expansion that can increase its eventual value. An RICS valuation will also offer a stronger case against any HMRC objections.
The Benefits of Obtaining a Probate/Inheritance Tax Valuation
An inheritance tax valuation can help you determine the value of an estate being passed down to heirs or beneficiaries. This valuation is important because it calculates the tax that must be paid on the inheritance.
By obtaining an accurate valuation of the assets in the estate, you can ensure that you are paying the correct amount of inheritance tax. Suppose the estate’s value is over the tax threshold. In that case, it may be subject to inheritance tax, so it is essential to have an accurate valuation to avoid any penalties or additional taxes.
In addition to helping with tax calculations, an inheritance tax valuation can also be helpful for estate planning purposes. By knowing the value of your assets, you can make informed decisions about how to distribute your wealth and minimize the tax burden for your heirs.
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FAQ
Frequently Asked Questions
Probate is the legal authority granted to deal with assets owned by someone who has died. HMRC often requires a valuation report before probate can be granted to determine the inheritance tax that will be payable on the estate.
If you inherit a property and decide not to sell, a valuation report will still be required if the estate’s total value may reach £325,000 or more.
That includes both property and other assets.
If you are a personal representative of the deceased, such as an executor or administrator of the estate, you are responsible for securing a real estate valuation. The Valuation can be challenged by HMRC, with penalties applied to the Executors if they are negligent in obtaining a property valuation.
Without the valuation report, an Executor or Administrator may not gain authority to sell the property.
Our reports comply with Section 160 of the Inheritance Tax Act 1984 and the RICS Red Book. Our experience allows us to be thorough and evidence our findings sufficiently to mitigate any risk of challenge by HMRC.
Our Chartered Surveyors and RICS registered valuers have the necessary knowledge and expertise to carry out Valuations across the South of England.
We aim to provide valuation advice in compliance with the RICS Valuation Global Standards, also called the RICS ‘Red Book’. This document sets out the gold standard for undertaking valuations through a quality-assured process, so you can have confidence that consistency, objectivity, transparency, and high service standards are maintained.
Inheritance tax is a 40% tax applied to estates valued over £325,000 after someone dies. This includes property and all other assets. If the total estate value exceeds this threshold, inheritance tax must be paid on the amount above £325,000.
Yes, a valuation report is still required if the estate’s total value (including both property and other assets) may reach £325,000 or more, even if you decide to keep the property rather than sell it.
While this is the easiest option, HMRC could challenge a valuation that appears suspiciously low, especially if it’s below the £325,000 tax threshold. HMRC has become increasingly vigilant and now recommends using a RICS Chartered Surveyor for accurate market valuations.
Estate agents are not qualified to provide accurate probate valuations. While you could obtain three estate agent valuations to establish an average, a RICS Chartered Surveyor will provide a more realistic and defensible valuation that considers repairs and market conditions.
If you are a personal representative of the deceased, such as an executor or administrator of the estate, you are responsible for securing the property valuation. Executors can face penalties if they are negligent in obtaining a proper valuation.
HMRC can challenge any valuation, with penalties applied to executors if the valuation is deemed inadequate. Using a RICS Chartered Surveyor who produces reports complying with Section 160 of the Inheritance Tax Act 1984 and the RICS Red Book significantly reduces this risk.
No, an executor or administrator may not gain authority to sell the property without the valuation report.
The inheritance tax is calculated using the probate valuation, regardless of what the property eventually sells for. Whether you sell for more or less than the valuation, it’s the probate valuation figure that determines the tax liability.
The RICS Red Book (RICS Valuation Global Standards) sets the gold standard for undertaking valuations. Reports that comply with these standards ensure consistency, objectivity, transparency, and high service standards, giving you confidence that HMRC is less likely to challenge the valuation.
A RICS Chartered Surveyor provides a thorough, defensible valuation that considers necessary repairs and offers expert evidence to mitigate the risk of HMRC challenges. They can also advise on renovations or improvements that could increase the property’s value before sale.