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HMRC internal manual

Inheritance Tax Manual

Household goods and personal goods: valuation and technical issues: how we value household goods

IHTA84/S160 stipulates that the value to be included in the IHT400 (IHTM10021) is ‘the price which the property might reasonably be expected to fetch if sold in the open market at that time’. You may want to ask Shares and Assets Valuation (SAV) for advice when very valuable items are included but, otherwise, 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 in the terms of S160, you will usually be able to accept it. This is subject to the comments about sales below.

A valuation prepared on any other basis may not satisfy the terms of S160, as the value could be more, or less, than the open market value. For example, a valuation ‘for insurance purposes’ using replacement values may include too high a value.

Where a valuation is described as being made ‘for probate purposes’ or for ‘IHT purposes’ you may want to confirm with the taxpayer or agent that the open market value has been used.

If you are concerned that the value returned does not reflect the open market value ask SAV for advice, if the amounts involved are worthwhile.

Generally, sales after the death, particularly those at auction, provide the best evidence of the open market value at the date of sale.  The taxpayer or agent may be happy to substitute the sale prices for the original valuations or may argue for an adjustment due to market movement between the dates of death and of sale. You should consult SAV (Chattels) if appropriate.

You will occasionally find that the taxpayer or agent will deduct either the cost of obtaining the valuation or the costs incurred in sales from the gross value. You must remember that any costs incurred after the date of death are administration expenses and therefore not deductible.  The auction sale price is the gross proceeds of sale (or hammer price) before deduction of commission and insurance and without addition of any buyer’s premium.

The taxpayer will sometimes seek to discount the value due to the fact that the assets are jointly owned. Please see IHTM21043.