Inheritance / Probate
Valuation to help permit a sale and determine tax payable
What is Inheritance Tax?
When someone dies, their estate may have to pay tax on its assets. This could include money, property 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 Chartered Surveyor / RICS Registered Valuer to help them gain probate. It may be that you are the executor or beneficiary and are looking and how to expediate the process so 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 an Inheritance Tax 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.
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 Chartered Surveyor and for it to be compliant with the Red Book (RICS Valuation Standards), which is the gold standard of reporting standards by the Royal Institution of Chartered Surveyors.
WHY WEBSTERS SURVEYORS
We recognise that you have a choice of which Surveyors to use and also how important this is. Dealing with a loved ones passing is difficult for an array of reasons without the added complication of having a Surveyor carrying out a Valuation inspection.
With such a lot at stake, we pride ourselves on putting in the time and effort to make sure that our reports are well constructed, reliable and most importantly, correct. Where there are discounts we're able to apply related to the form of ownership or who occupied the property on date of death, we'll do so, ensuring that the Estate does not pay more tax than it should have to. Our reports are more detailed than most firms are, mainly to ensure that nothing is missed as getting it right is crucially important when there is so much at stake.
As a firm of Chartered Surveyors, we have decided to ensure that all of our team also obtained the additional qualification of being RICS Registered Valuers. This accreditiation helps ensure that our reports are well considered.
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 still be the probate valuation which is considered, more so than the amount the property sells for.
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
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At Websters our Chartered Surveyors (who are also RICS registered valuers) have the necessary knowledge and expertise to carry out surveys across London and the South East.
We endeavour to provide valuation advice in compliance with the RICS Valuation – Global Standards, also referred to as 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 a high standard of service is maintained.