When somebody dies, probate must be granted so that the estate can be divided among beneficiaries in accordance with their will. However, before this can happen, the value of property, assets and belongings that form the estate, together with any debts or liabilities, must be calculated and reported to HMRC.
Who should carry out the valuation?
HMRC’s guidance states that you should obtain a professional valuation for any assets worth more than £1,500, unless the gross value of the estate is less than £250,000, or the entire estate is passing to a spouse or civil partner, in which case an estimated value can be used. In practice this will mean the services of an estate agent or a professional surveyor are usually required.
Local agents for low value, simple properties
In many cases, especially lower-value properties and estates where inheritance tax is unlikely to be payable, an estate agent’s informal valuation will be sufficient. This is likely to be free or at minimal cost, as the agent will be looking to take on the marketing of the property; some estate agents will charge a fee but offer to refund it if they subsequently sell the property. Obtaining valuations from more than one agent is not always required but is a good idea. The wording of the valuation is important; the agent should make it clear that this is an expected fair market value, rather than a “valuation for probate purposes”. You should also ensure that the agent isn’t providing an inflated asking price, which they would expect to knock down to a lower selling figure.
RICS valuation for higher value or complex properties
For more expensive or unusual properties, and where it is anticipated that the estate will be liable to inheritance tax, it may be wise to obtain a formal valuation from a surveyor who is a member of The Royal Institution of Chartered Surveyors (RICS). RICS issues a set of standards for valuation known as the Red Book, and a “Red Book valuation” is much less likely to be challenged by HMRC than an estate agent’s estimate. However, a surveyor will charge a fee for this service, which will vary by location and size of property but is likely to be at least £250 +VAT. A Red Book valuation is also recommended where the property is not a straightforward residential property, for example a farm, business premises or land with development value. HMRC investigated one quarter of estates in 2019-20 where IHT was due and if yours is challenged the cost of solicitor time (and hassle) dealing with the challenge is likely to outweigh the cost of the Red Book valuation so we would recommend you get one.
For this service please call and ask to speak to the survey department.