‘Chattel’ under probate law means any item of personal property you could touch, and move if you wanted to. This article discusses the implications of probate chattels and inheritance tax in deceased estates, However, this is merely an introductory overview, and you should consult a qualified adviser before making long-lasting decisions.
How Inheritance Tax Works in United Kingdom
The UK government deducts inheritance tax at source, and will not allow distribution of estate assets until this is paid. This means an estate executor must first:
- Identify and value all the chattels (and other assets).
- Calculate and pay across all the inheritance tax due.
There is thus a legal obligation on executors to diligently ascertain the full range, and fair value of all investments, property, and possessions. Our qualified valuers regularly assist executors to unravel the implications of probate chattels and tax, with a view to helping them avoid any financial penalties.
Delving Into Probate Chattels and Inheritance Tax
The tax authorities allow two options depending on the size of the deceased estate:
- A shorter-form process if there IS NO inheritance tax due, using Form IHT205.
- A more complex process using Form IHT400, if there IS inheritance tax due.
Is This Rare and Valuable (Image ©Avery Associates)
How To Value Chattels and Other Assets
An executor of a deceased estate must therefore be able to value an estate’s assets accurately. The financial assets – for example cash-in-bank and stocks and shares – should be relatively simple because their value is absolute.
However, property – land and buildings – is more complex, because the value depends on market trends. Under-valuation may invite a tax enquiry, where ignorance is no excuse! Speak to us soon if you would like a RICS property valuation you can trust.
Chattels may evoke emotional memories among surviving relatives. However in the mind of a tax assessor, value is the price an asset might reasonably have fetched on the open market on the day of death. This opens the question, how then should an executor determine fair value?
Considerations When Valuing Chattels for Probate
This can be a challenge when unraveling probate chattels and tax. That is because there is a vibrant market in the UK for collectible assets, with auctions recording chart-topping prices for some categories. However, others may have fallen out of fashion, and become worth little if anything at all.
Value Is in The Eye of The Market (Image ©Avery Associates)
The first step in the process of valuing chattels for probate and inheritance tax, involves identifying the possessions. These may not all be in the deceased’s home, for example:
- Some valuable chattels may be in safe custody at a bank or building society.
- Others may be in the care of family members if the deceased was unwell.
- They may have gifted some items listed in their will, or letter of intentions.
The Gazette government newspaper provides the following examples of chattels, although their list is by no means complete:
- Vehicles, including boats, caravans, aeroplanes, etc.
- Works of art, jewellery, china, silverware, glassware.
- Furniture, electrical goods, clothing, electronic goods.
- Collections of coins, stamps, childhood toys, or wine.
How to Value Chattels for Probate and Tax
You may not need an experienced, professional valuer. Many popular items trade on the open market, for example cars, motorcycles, and boats.
You should also not require our assistance if the total value of the estate is below £325,000, when a reasonable, defensible assessment should be adequate.
A Rare And Exceptional Collection(Image ©Avery Associates)
However, the tax authorities will still have the right to request further information. We recommend recording the details of individual items, and photographing them before distributing them and clearing the home.
But you may need to take a different approach with collectible items worth over £1,500, including items in a set. The value of some antiques, artworks, and other items of special interest have been rocketing. It may pay you to give us a call if you suspect you have real value on your hands.
Probate Chattels Tax and Avery Associates
Avery Associates in Tooting, Greater London are registered valuers of collectible items, and general house contents too. We specialise in all aspect of probate chattels and tax relating to deceased estates and distribution of assets.
Please contact us by following this link and reaching out to us whenever convenient. We comply fully with Section 160 of the Inheritance Tax Act 1984, and can submit reports directly to Inland Revenue for inheritance tax calculations.
More Information
Residential Property Valuations By RICS Surveyors
Chattels Wills and Letters of Intention
