We all know that Inheritance Tax (IHT) can cost families a lot of money when a loved one dies. But did you know that there are steps you can take to reduce the amount of IHT payable? One way is to get an independent valuation of property assets (also sometimes known as a ‘probate valuation’).
What is IHT?
IHT is essentially the tax payable on assets left behind when a person dies. In the current tax year (2019/2020), anyone is allowed to leave an estate worth up to £475,000 – which includes the recently introduced £150,000 ‘main residence’ allowance – without being subject to IHT. Estates above this threshold are subject to a tax of 40%, on the amount above the threshold.
IHT applies to assets such as property, investments, vehicles and cash. In many cases, property makes up the largest part of a person’s estate – and, therefore, is the element most likely to push an estate over the IHT threshold.
Getting an independent probate valuation for IHT purposes
At Perry Hill, we work with families and representatives of the deceased to provide an independent value of property assets for probate. This valuation process applies whether the deceased had left a will or not. It’s absolutely vital this valuation is accurate because the market value of the property at the date of transfer (usually, the date of the deceased’s death) is used to calculate how much IHT is payable.
We also work with property owners to provide comprehensive assessments and valuations for the purposes of estate planning – thereby helping clients proactively reduce the tax burden for beneficiaries.
As with any valuation being used for tax purposes, probate valuations must be carried out by a professional member of RICS, the Royal Institution of Chartered Surveyors, according to RICS Red Book standards. That’s why the valuation is often referred to as a ‘Red Book valuation’.
Reducing your IHT liability
Whether you’re navigating the difficult probate process, or putting together your own estate plan, working with a professionally recognised valuer is the safest way to ensure you get a fair valuation and that you or your loved ones don’t pay any more tax than necessary.
Perry Hill’s independent, RICS-accredited chartered surveyors provide valuations across London and Surrey, helping to ensure our clients’ best interests are represented. Find out more about our Red Book valuation services.