Do I need an RICS Valuation for Probate?
When it comes to probate valuations one of the most common questions we hear is who is “good enough” in HMRC’s eyes to carry out the work.
Does every asset need to be assessed by a chartered RICS valuer, or can executors and solicitors rely on other forms of expertise?
And how can you be confident that what you submit will meet HMRC’s standards?
What Does “to RICS Standards” Mean?
When HMRC refers to valuations being in line with ‘RICS standards’ it is referring to the RICS Valuation Global Standards, known as the Red Book. In practice, this means:
- a full written report
- methodology and comparables clearly set out
- an assumption of a sale between a willing buyer and willing seller at the date of death
- adjustments for any factors such as leases, restrictions or shared ownership
Property and Real Estate
Property is usually the single largest asset in an estate and the category most likely to attract HMRC scrutiny.
For straightforward estates it may be enough to obtain two or three local estate agent appraisals and keep written evidence.
The Society of Estate and Trust Practitioners (STEP) wrote to HMRC to clarify what they expect and in response were told that penalties will not be charged where the method of valuation is “reasonable and proportionate in the circumstances” but gave no specific detail (STEP summary of HMRC guidance).
In its own Inheritance Tax Toolkit HMRC specifies:
“For assets with a material value you are strongly advised to instruct a qualified independent valuer, to make sure the valuation is made for the purposes of the relevant legislation, and for houses, land and buildings, it meets Royal Institution of Chartered Surveyors (RICS) or equivalent standards.”
HMRC’s comments to STEP imply flexibility, but their Toolkit guidance leans heavily towards RICS standards.
In practice, while HMRC avoid making RICS valuations mandatory for properties, it is obvious that they expect them in all but the most straightforward cases.
Chattels and personal possessions
For personal possessions, HMRC accepts that no specialist is needed and that executors may use a ‘reasonable estimate’ if the total value of personal possessions is below £1,500 (The Gazette).
The difficulty, of course, is how a lay person can be confident the contents of a house fall below this threshold.
HMRC also expect any items of jewellery, art or antiques worth over £1,500 to be individually itemised on IHT407, which is again tricky for a lay person to judge given that the carat of gold and the colour and clarity of a diamond are critical in determining the market value of an engagement ring.
While HMRC does not require RICS standards for house contents, jewellery, or antiques, they do expect valuations from a suitably qualified professional. Local auction houses, gemmologists, or cost-effective services such as Swift Values’ £99+VAT online house contents valuation are more than sufficient to meet these requirements, provided the report is worded correctly.
HMRC’s own guidance to their collegues states:
“…if the taxpayer has provided a professional valuation of household goods, which states that it has been prepared on the basis of the open market value and/or in the terms of S160, you will usually be able to accept it.” HMRC Inheritance Tax Manual
What This Means in Practice
HMRC is deliberately woolly when it comes to the standards they expect for probate valuations.
Because property now makes up the bulk of most estates, it attracts the highest scrutiny. For larger estates, or where there are complexities such as leaseholds, land, annexes, or development potential, it is prudent to obtain a formal RICS valuation.
By contrast, household contents and personal possessions are treated differently. A difference of a few percentage points in a chattels valuation may only amount to tens or hundreds of pounds, compared with the many thousands a small difference can make on a property valuation. As a result, HMRC applies a lower standard of scrutiny.
For chattels there is never a requirement for a RICS valuer or a report to RICS standards. You only need a suitably qualified specialist and a correctly worded report.
At Swift Values, we have a 100% acceptance rate from HMRC.
On the rare occasions a query has been raised, we have provided justification at no extra cost to the client which led to the original valuations being accepted.
