Defensible Red Book valuations for estate administration and inheritance tax, prepared as at the date of death to the standard HMRC and the District Valuer expect, and negotiated on the estate’s behalf if they query the figure.
When someone dies owning property, the estate needs a valuation of that property as at the date of death. It is the figure that goes on the IHT account, sets the base cost for any later capital gains tax, and underpins how the estate is divided. Get it wrong in either direction and there are consequences: too high and the estate pays more inheritance tax than it owes; too low and HMRC can challenge it, with penalties where the valuation was not properly considered. We prepare the figure carefully, document it fully, and stand behind it.
We act for executors, administrators, beneficiaries and the solicitors and accountants advising them, on houses, flats, blocks, land and commercial property across London and the South East.
Inheritance tax is charged on the value of the estate at the date of death, and the statutory basis is set by section 160 of the Inheritance Tax Act 1984: the price the property might reasonably be expected to fetch if sold on the open market at that time. That is a specific legal test, not a marketing appraisal or an estate agent’s asking price. We value to that test, in accordance with the RICS Red Book, with a full inspection, evidence of comparable sales around the relevant date, and a written rationale that explains how the figure was reached.
Where inheritance tax is in point, HMRC routinely refers property figures to the District Valuer (the Valuation Office Agency) to check them. The DV will look at the estate’s valuation, test it against their own evidence, and may come back asking for the figure to be increased. A valuation prepared to a proper standard from the outset (properly evidenced and reasoned) is far less likely to be disturbed, and gives the estate firm ground to stand on if it is.
If the District Valuer challenges the figure, we handle the negotiation on the estate’s behalf. Because we prepared the valuation to withstand exactly that scrutiny, the conversation is about evidence rather than guesswork, and in most cases the figure is agreed without the estate paying a penny more inheritance tax than it should. Where a genuine difference of view remains, we advise on the options and represent the estate through to resolution.
Estates rarely own property in tidy whole slices, and this is where date-of-death figures most often go wrong. Where the deceased held an undivided share in land, as a tenant in common, the estate is not simply reporting a fraction of the value of the whole. A part share carries real disadvantages for a buyer, and the valuation has to reflect that on evidence rather than on a rule of thumb. The District Valuer looks closely at the discount claimed, so the reasoning behind it has to be set out properly in the report.
Cutting across that is section 161 of the Inheritance Tax Act 1984, the related property rule. Where property in the estate is related to property held by a spouse or civil partner, or to property given to a charity in the circumstances the section describes, the estate’s share is valued as the appropriate proportion of the two holdings taken together where that produces a higher figure. In plain terms, a half share in a house owned with a surviving spouse cannot be discounted as though it were a share held with a stranger. Missing this produces a figure HMRC will not accept; applying it where it does not bite costs the estate tax it does not owe.
The property figure goes onto schedule IHT405, ‘Houses, land, buildings and interests in land’, which is submitted with the IHT400 account. HMRC asks that a copy of any professional valuation be attached to it, and that is the point at which a properly evidenced Red Book report does its work: it arrives with the account rather than being produced later under challenge.
The timetable is worth knowing before the valuation is commissioned rather than after. Inheritance tax on the estate falls due six months after the end of the month in which the death occurred (s.226 IHTA 1984), while the account itself is due within twelve months from the end of that month, or three months from when the personal representatives first act, whichever is later (s.216(6)). Tax attributable to land can be paid in ten equal yearly instalments (s.227 IHTA 1984), which changes the cash position for an estate whose main asset is a property that has not yet sold. We work to those dates, and we would rather be instructed early than asked to produce a considered figure in the last fortnight.
A probate valuation is not a one-off compliance exercise. Under section 62 of the Taxation of Chargeable Gains Act 1992, the personal representatives are treated as acquiring the deceased’s assets at their market value at the date of death, and there is no deemed disposal by the deceased on death. The probate figure therefore becomes the acquisition cost for capital gains tax on any later sale by the estate or by a beneficiary. A figure pitched low to save inheritance tax quietly manufactures a gain further down the line, and the two bills are rarely charged at rates that make that a good trade. Where the death was years ago and no proper figure was ever established, a retrospective valuation can fix the base cost on evidence from the relevant date.
Estate work is done at the tempo families and their advisers actually need: promptly, sympathetically, and without drama. Every valuation is director-led and prepared for professional reliance, fees are agreed in advance, and we can value retrospectively where a death occurred some time ago and the figure was never properly established.
For a small estate well within the nil-rate band, an agent’s appraisal may be enough. But where inheritance tax is in point, HMRC expects a valuation prepared by a RICS Registered Valuer to the statutory basis. An agent’s asking price is not that, and HMRC’s District Valuer will treat it accordingly.
Inheritance tax is assessed on the value of the property as at the day the person died, not today. We value to that historic date using evidence from around that time, which is essential when the property is sold or assessed months or years later.
We negotiate with them directly on the estate’s behalf. Because the valuation is prepared and evidenced to withstand that review, most queries are resolved without any increase. Where a real difference remains, we advise on the options and represent the estate through to settlement.
No. An artificially low figure invites challenge and penalties, and it lowers the base cost for capital gains tax, so a low probate value can simply move the tax from IHT to a larger CGT bill on a later sale. The right answer is an accurate, defensible figure, which is what we provide.
Yes. We carry out retrospective date-of-death valuations where a figure was never properly established: for a late-administered estate, a deed of variation, or to fix the CGT base cost before a sale.
Where estate land is sold within four years of the death for less than its date-of-death figure, the inheritance tax on the difference can often be reclaimed under loss on sale of land relief (s.191 IHTA 1984). It is a claim with real traps, and it turns entirely on the strength of the original valuation, which is why we prepare that figure to withstand scrutiny. How the relief works, and where it quietly disappears →
It depends on how the title was held and on who the co-owner was. A share held as a tenant in common is valued as a part share, which is worth less than the arithmetic fraction of the whole, and the discount has to be justified on evidence. But where the co-owner is a surviving spouse or civil partner, the related property rule in s.161 IHTA 1984 usually removes that discount. We check the title before valuing, because getting this step wrong is one of the most common reasons the District Valuer raises a query.
