Probate is a legal process that needs to be carried out during an emotionally charged time. While it might seem tempting to get it sorted as quickly as possible, it is imperative to take the time to ensure it is correctly carried out, otherwise you might be facing issues further down the line with HMRC. As an executor, you have a legal responsibility to ensure probate rules are adhered to. A common query when dealing with an estate, is whether there is a difference between a probate valuation and a market valuation.
Probate valuation and market valuation are two different types of valuation. Probate valuation is used to calculate the value of a deceased person’s estate for inheritance tax purposes. It is based on the realistic value of the assets if offered for sale on the open market (for example as auction) at the date of death. Market value, on the other hand, is used to assess an item’s current worth in order to determine its potential sale price. It takes into account factors such as location, condition and recent sales in order to estimate a fair market value. Often these values can be similar, but it is still crucial to understand their differences and obtain the accurate valuations as set out by the HMRC.
These valuations involve different procedures and require the use of specialised professionals such as probate valuers and estate agents. Items considered to be worth more than £1,500 will require a professional valuation, but HMRC will accept estimates for lower value items such as household items, soft furniture, pots, and pans, etc. If you are unsure, you should consult with a professional, it is not worth the risk of being caught out over a guesstimate. If HMRC suspect the valuation is not accurate, they will investigate. They have the authority to impose a fine of up to 100% of any additional tax found to be owed, recent figures have been in excess of £20,000. Executors can also be held personally liable for incorrect declarations. It therefore makes sense to pay the reasonable costs of employing a qualified professional.
Valuations of some possessions can be straightforward, such as that of a car. A search on Parkers can provide an accurate guideline valuation of the vehicle based on comparisons of the same make and model, and similar condition. For jewellery, art, antiques, and collectables, always contact the experts. At Dawsons Auctioneers, our team of friendly specialists are on hand to assist with any queries you may have.
Put simply, a Probate valuation is a process used to calculate the value of a deceased estate for tax purposes and is determined by HMRC guidelines. Whereas Market valuation is used to determine a fair current market value of an estate and is determined by the sale price of similar assets within the marketplace. Both types of valuation are important when it comes to understanding an estate’s worth, especially when dealing with HMRC and inheritance tax issues.
Are you looking for a probate valuation? Or perhaps you are considering selling art, antiques, jewellery, or collectables and require an accurate market valuation?
Get in touch with our friendly team of expert Valuers today, we would be delighted to help: