Valuing house contents for inheritance tax

[franke]

I'm valuing my late mother's estate for inheritance tax purposes. I'm getting into a bit of a panic about the contents valuation. Although the estate is worth around 800k, half of that is her apartment and the rest is investments. Her contents consists of very little of any great worth, certainly no item over £1500. It's what I would consider typical stuff belonging to a frugal 90 year old, living in a modest 3 bed flat.

Do I really need to get a professional valuation? It will probably cost almost as much for the valuation as the value of the contents. Can I donate her clothes to charity or do they need to be included in the valuation? There's nothing special there, no designers. What do I do about items like pictures - she liked them, but they're quite old fashioned. Some nice china but still fetches very little on eBay.

If you've been through this, how did you handle this bit?

Hmm, I see your point, @franke I suppose none of that applied for us because IHT wasn’t payable.

Sorry for your loss OP.

We got a surveyors valuation because our late relative had a valuable house. The suggested value was similar to the estate agents valuations which we got for comparison but I was happy to pay for it given that the estate was big.

The house sold for more than the valuation (prices rose between date of death and date of sale). We will have to pay CGT on the difference rather than IHT which means that HMRC will get a bit less tax. It wasn’t deliberate but that’s how it worked out.

The deceased had some valuable possessions (think specialist collectibles) and we had an auction house do a valuation. They said they had to include a figure for eg clothes and kitchenware even if these were effectively worthless in resale terms. It was annoying but that’s just how it is.

If you donate items to charity and they agree to certify the value of what you give, you can include it on the form and not pay IHT on that value. Form is here:
assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/497811/IHT408.pdf

I did the probate myself for this relative and it was very time-consuming but doable. I did use a solicitor for ad-hoc advice (which I obviously had to pay for) but there is lots of advice on the HMRC website. Good luck OP.

Thanks @Imanexecutor This is all useful info. I was wondering about the donating to charity thing to reduce IHT, but seems a bit of a faff. Will look into it a bit more.

It's five weeks since dm died. I still can't quite believe it. It's a bit like being being unexpectedly slapped in the face every now and again, those moments when I suddenly remember. My thoughts are with all of you going through this, it's brutal.

I must admit that I didn’t do the charity shop form although we gave loads of stuff to a charity (one came and did a bit of a house clearance and we donated lots of bits to a local shop as well). You could try British Heart Foundation for example.

Thanks- this is a very interesting thread. My dad died recently too. We’re using a solicitor because the property has land and we’re not sure whether we can get tax relief on the land, it’s a bit complicated. We told her dad had nothing particularly valuable, but she hasn’t advised us what to put yet. The car is only £400 and I doubt the value of furniture will be more than a couple of hundred.

@Honeyroar I'll be interested to hear what your solicitor advises re the contents value.

Me too. My Mum’s house was a typical older person’s house - lots of beige dralon, beige carpets. The furniture is shitty MFI and the beds - mine dates from before I left home nearly 40 years ago, and my Mum’s is older! No jewellery apart from her wedding ring - lots of junk jewellery. Clothes all from Asda or Primark. No ornaments of note.

Our solicitor entered the contents as a nominal sum too. I can’t remember how much now but it was certainly under £1000, if that, for a 3-bed detached house. Heartbreaking really. DM loved her few treasured little bits, things that had come down from her mother and grandmother, but they weren’t actually worth anything. I asked an auction house for a valuation of an old oak dresser but they gave a very dismissive reply and wouldn’t even give a figure, let alone consider selling it for me.

I’m sorry you’re going through this, @franke - it’s a horrible thing. It made me feel very alone and really hit home that I’d lost my dear mum (who’d been my surviving parent).

I’ll let you know as soon as I know. Unfortunately my mum has fallen and is in hospital, and we’ve both caught Covid while she’s been in, so I won’t get to the solicitor until next week.

I'm sorry to hear that @Honeyroar. I hope you're both OK

We have a house with land. We are not making a living from it though. It’s not a farm. I suspect it’s just valued as part of the estate. I think it has to be a farm to be treated differently. I’d love to be wrong though!

I think you’re right Tizerorfizz - agricultural land is tax free, but I think it has to be farmed by the person that died, and horses only count if a stud farm, from what I can gather..

Thanks Franke. I’m starting to feel better. Hoping I can see mum this afternoon. They say she’s improving.🤞

@Honeyroar
That is what I thought. It had to be a business. Not land to facilitate leisure.

Just to confirm, we used an estate agent to value the house and that was questioned by HMRC. We then agreed a higher valuation which increased the IHT bill. However the £200 valuation for the house contents wasn’t queried! I did sell a couple of small items but clearing the house meant there was a loss on the contents. As someone noted above, the skip we hired cost over £300 and then we used a house clearer for the larger items. The buyers of the house insisted on the house being completely cleared (understandably) and that did cost a lot of money.

House valuations are the big numbers for HMRC. Not contents of little value which they won’t be able to value themselves. Valuables should be given away in good time. Even HMRC can look on Rightmove!

As a trainee solicitor in the private client department I had to administer the estate of a deceased lady who had no relatives. She lived in a small 3 bed house the contents of which were of modest value, e.g. G plan furniture. We had a house clearance company empty the place and they paid £500 for the entire contents. Hope that helps.

Thanks all. This is all really helpful. I think the way forward is to uplift the value of the flat - we can always claim back the tax. As @TizerorFizz said the contents valuation is pretty much unproveable and is such a low number in the great scheme of things I think I just have to put down any reasonable figure. I think dm was part of a generation many of whom lived in modest accomodation, bought their furniture in the 60s and 70s, never replaced it and never really updated anything else either. The HMRC must know this.

@franke
Yes. That’s it. There might be jewellery but they cannot prove that either. House valuations are an entirely different matter.

Update in case anyone ever comes back to this thread. I eventually put down £500 as a contents valuation - actually far more than the £0 we actually got. But it was accepted without question by HMRC, which was my main concern.

With regard to the apartment valuation, I asked for a probate valuation from three local estate agents which they all provided for free. I sent copies of these with the IHT forms and included the higher value on the form (two of the three had given the same slightly higher value than the other). If we sell it for less I can claim back the difference in tax apparently.

So in hindsight, if anyone is in my position with an uncomplicated, modest (in the great scheme of things) estate, I would definitely recommend doing this process yourself. It's time consuming but I found all the people I had to deal with, including the HMRC helpline, incredibly kind and helpful. I sent the forms at the end of February and had a letter from HMRC confirming the tax calculation four weeks later. Just waiting for probate now, but that takes some months at the moment.

And thanks again to everyone who replied on this thread. I seriously don't know where I'd be without mumsnet for these major life events

This is my mum, I just thought there'd be a box to tick saying "nothing of value"?

I'm so sorry OP. Talk about making a bad time worse.