Acting as a Personal Representative (PR)—the formal term for an executor (appointed by a Will) or an administrator (on intestacy)—is a significant responsibility. In Scotland, this process is known as Confirmation, where an executor nominate or executor dative is granted authority to manage the estate. Among the most important duties of a PR is ensuring the estate is valued correctly for Inheritance Tax (IHT) purposes.
While most PRs act in good faith, valuation mistakes are common and can lead to HMRC enquiries, additional tax, interest, or even personal liability. Below are the most frequent errors, updated with professional standards and current legislation.
1. Using Insurance Values Instead of Probate Values
- Insurance schedules typically reflect replacement costs, retail pricing, or “new-for-old” cover.
- For IHT, the PR must identify the open market value at the date of death—defined as the realistic price the asset would achieve if sold between a willing buyer and seller.
- Insurance figures are often significantly higher than these "probate values" and should not be used for HMRC submissions.
“This is not uncommon and can inflate the estates value and the tax due. Using a qualified valuer for the jewellery and the overall household contents is best practice when handling an estate that exceeds the IHT threshold”
2. Guessing the Value of Household Contents
- PRs often estimate personal chattels (tangible movable property like furniture and clothes) at a “round figure” without a professional inspection.
- Underestimating contents is a frequent trigger for HMRC scrutiny.
- Common assumptions that there is “nothing valuable” can be costly; items like jewellery, artwork, silver or collectables hidden in bedside tables or lofts often hold significant value.
“This is a crucial area to get right because guessing can unfortunately trigger an HMRC investigation. This is especially true for items like artwork or jewellery worth more than £1,500, which must be listed individually for tax purposes.
By using qualified experts — such as an RICS valuer for the home and art, or an FGA/GIA jewellery specialist—you ensure these "personal chattels" are valued correctly using the required "open market" price. Not only does this give you a defensible audit trail for HMRC, but it can also help speed up the Grant of Probate. This is a great way to protect the estate, as it helps you stay within the six-month window to avoid paying unnecessary interest on any tax that might be due.”
3. Undervaluing Property
- Real estate must be valued at its true open market value at the date of death.
- Mistakes include relying on informal agent comments, using outdated market data, or ignoring recent comparable sales.
- PRs must also identify property qualifying for the Residence Nil-Rate Band (RNRB), which can provide an additional £175,000 allowance if the family home is "closely inherited" by lineal descendants.
4. Overlooking Assets Entirely
- It is easy to omit assets that aren't on paper, such as digital assets (cryptocurrency wallets) or small investment accounts.
- Under the Long-Term Residency (LTR) regime effective April 2025, if the deceased was resident in the UK for 10 of the last 20 tax years, their worldwide assets must be declared for UK IHT.
- Additionally, from April 2027, most unused pension funds and death benefits will be included in the estate for IHT purposes.
"It is surprisingly easy to miss things, so ensure you track down digital assets like cryptocurrency, declare worldwide property if the deceased lived in the UK for 10 of the last 20 years, and prepare for the 2027 change that brings unused pensions into the inheritance tax net."
5. Confusing Joint Ownership Rules
- Assets held as joint tenants (or with a “special destination” in Scotland) pass automatically by survivorship to the surviving owner, often outside the terms of the Will.
- Assets held as tenants in common (or without a special destination in Scotland) do not pass automatically; the deceased’s share must be valued for distribution according to the Will or intestacy rules.
- Incorrect treatment of these interests can fundamentally alter the total taxable estate value.
“It’s vital to know exactly how you own assets with others. If you are joint tenants (or have a ‘special destination’ in Scotland), your share passes automatically to the survivor, often bypassing your Will entirely. But as tenants in common, your share stays in your estate to be distributed according to your wishes. Mixing these up can completely change the inheritance tax your estate has to pay, so it’s a detail definitely worth double-checking! It also highlights the benefit of having an up-to-date Will to ensure your wishes are upheld after your death”
6. Failing to Use the Date of Death Value
- Valuations must strictly reflect market conditions on the date of death, not the date probate is applied for or when an asset is eventually sold.
- A professional valuation must also be calculated net of funeral expenses and debts (such as loans or credit cards) outstanding at the date of death.
- Market fluctuations in property or shares between the date of death and the inspection date can create discrepancies that HMRC may question.
7. Not Keeping Supporting Evidence
- HMRC frequently requests evidence for declared values, such as comparable sales data or formal written reports.
- PRs who rely on informal estimates often struggle to provide a defensible audit trail.
- This is especially critical when claiming the Transferable Nil-Rate Band, where PRs must provide documentation from the first spouse's death to substantiate the unused allowance.
“Timing is everything for art and jewellery (personal chattels). Personal Representatives must use the open market value on the date of death, not a later sale price. Using a qualified RICS valuer or jewellery specialist is the best way to meet your statutory duty of care and get proper advice. This provides a clear audit trail for HMRC and ensures the estate is handled fairly.”
8. Assuming Probate Values Equal Sale Values
- A common misconception is that the probate value and sale price must match.
- In reality, prices often differ due to market movement, competitive bidding, or time delays.
- However, significant discrepancies without documented justification (like market shifts since the death) will attract HMRC attention.
“It is a common misconception that probate and sale values must match. Markets move and auction bidding is unpredictable, and HMRC understands that some items will naturally exceed expectations.
The key is ensuring your Personal Representatives provide a defensible valuation based on the open market value at the date of death. By using a qualified valuer, you fulfill your statutory duty of care and create a professional audit trail that justifies your figures, even if there is a later discrepancy in the sale price.”
Why These Mistakes Matter
Personal Representatives have a statutory duty of care. Under English law, the Trustee Act 2000 demands a higher standard of care from professional PRs (like lawyers or financial planners) or those with special experience. Negligence in the valuation process can result in IHT penalties, interest charges, and potential personal liability for the PR if they cannot prove they took reasonable steps to obtain accurate figures.
How Personal Representatives Can Avoid Mistakes
- Obtain professional probate valuations for property and personal chattels.
- Identify all assets, including worldwide property under the LTR regime and digital assets.
- Use open market values and ensure the estate is valued net of liabilities.
- Identify tax reliefs early, such as Business Relief (BR) or Agricultural Relief (AR); note that for deaths after 6 April 2026, a new £1 million cap will apply to these combined reliefs.
- Keep written evidence of all valuations and professional advice to provide a defensible audit trail for HMRC.
Related Articles
How HMRC Assesses Probate Valuations
How To Establish the Value of an Estate
The Importance of Accurate Probate Valuations
If you are currently dealing with an estate and require a probate valuation, Dawsons Auctioneers provide professional, HMRC-compliant reports for executors, solicitors and families across the UK. Our specialists assess house contents, jewellery, art and antiques, offering clear guidance and transparent fees throughout the process.
If you would like further information or to speak to a specialist, you can explore our services or get in touch with our team.
