Inheritance Tax (IHT) once upon a time known as Estate Duty is a Tax on the value of a deceased
person’s wealth. It is the aggregrate of the value of everything, house(s), company shares, cars – the
lot, above a certain sum, which is known as the Nil Rate Band (currently £325,000).
A senior and well-regarded local solicitor who specialises in this field might advise that you could
avoid IHT by leaving everything to Charity. Your offspring might not think that that was good family
planning. You might leave part of your estate to a charity to bring the balance into the Nil Rate Band.
Some careful valuations are necessary here. IHT is also payable on certain gifts made within the
seven years before death. There is a sliding scale so that less tax is payable the longer before death
the gift was made.
The advice you would receive is that the only safe thing is to have Professional Valuations to comply
with Her Majesty’s Revenue and Customs (HMRC) recommendation. Your Executors need to get
letters of administration (Grant of Representation) in order to manage your Will. This means having
an Inheritance Tax (Probate) Valuation of the property assets of the Estate carried out. A Royal
Institution of Chartered Surveyors (RICS) Registered Valuer is accepted by HMRC for your house
and other landed property. This Valuation is commonly known as a “Red Book” Valuation but is
technically called a Market Valuation in accordance with the Inheritance Tax Act 1984.
This is wise advice because without a Red Book Valuation, the Executors could be accused of
negligence if the property is not sold or passed to a beneficiary other than for its proper value. This
can result in a squabble among beneficiaries. Also, if part of the Estate is left to Charity, particularly
if there is more than one Charity, or the asset is to be passed to, or passed in part to members of the
family, people will look very closely at how the value of the Estate has been split. It is therefore
advisable for the Personal Representative (Executors) to obtain a RICS “Red Book” Valuation to
ensure that there is a proper value on which to base their dealings.
An accurate Valuation is particularly important when assessing the Market Value of unusual
properties, for example where the property is listed or requires substantial refurbishment or there is
development potential or the property is owned jointly by multiple members of the family.
A Personal Representative is the person(s) who is responsible for dealing with the Estate of the
deceased and informing HMRC of the Inheritance Tax due. To obtain
the “Grant of Representation”, the assets of the Estate must be valued. Any gifts made in the
preceding seven years, before the date of death, minus any debts, are included.
HMRC may appoint the local District Valuer to assess the accuracy of the Valuation of the property
elements within the Estate. If the Valuation of the assets is inaccurate, HMRC have the power to levy
financial penalties against the Personal Representative and the Estate.
Grillo LLP Chartered Surveyors has over 50 years of providing Inheritance Tax Valuations for
a range of residential and commercial properties within the area. If you require any advice in
this regard, please do not hesitate to contact us on 01483 860600 or email@example.com.
Regulated by RICS