Valuations or estimations on the IHT205?

It is the responsibility of personal representatives to value the estate.

If there is no inheritance tax on the estate, the personal representatives must complete the “return of estate information” form (IHT205). This form asks for valuations of all the deceased’s assets and debts, including bank accounts, belongings, shares, house, business assets, mortgage, funeral expenses and more.

The form is submitted to a local probate registry, along with the “probate application” form (PA1) and any other required documents. This is the application for a grant of representation. A different process applies if a solicitor is dealing with the estate, though valuations are required in either case. 

How accurate should probate valuations be?

The most recent version of the IHT205 form (March 2011), states the following:

“make the fullest enquiries so that you can show that the figures on this form are correct. If you cannot find the value for an item you may include your best estimate”. 

Fullest enquiries usually include:

1. writing to banks, utility companies and other institutions to request date-of-death balances;
2. obtaining a formal date-of-death valuation of the house (if any) from an estate agent;
3. obtaining date-of-death valuations of shares (if any);
4. obtaining a date-of-death redemption figure on any mortgage; and
5. obtaining date-of-death valuations on particularly expensive belongings, including cars, antiques and so on (though typically a “best guess” for belongings will suffice).

The closer the estate is to the inheritance tax threshold, the greater the onus is on the personal representatives to provide formal valuations. Even though the IHT205 is not submitted to HM Revenue & Customs, you could be asked to back up the valuations, particularly if the estate is close to the tax threshold.

Valuing small estates: less than £250,000 or exempt

Official guidance from HM Revenue & Customs states that formal valuations are not required if the estate is:

1. worth less than £250,000 (gross, i.e. before debts and expenses are taken off); and/or
2. is exempt from inheritance tax because it is passing to a spouse, civil partner or a registered charity.

If you are a personal representative you can – in these circumstances – give your “best estimate”. As advised by The Probate Service, “you should not guess at a value but try to work out an estimate based on the information available to you”.

This information may be recent bank statements, local house prices, comparable car values and so on.

Valuations should be at date of death

The valuations entered on the IHT205 form should be at the date of death, not at the time that the form is completed.

Bank accounts, house and shares...

• you will have to contact banks quickly to advise of the death and to obtain closure forms, so you may wish to request date of death balances at the same time;
• because a house is usually a deceased’s main asset, it is usual to obtain a formal date-of-death valuation from an estate agent, known as a “probate valuation”;
• shares can be formally valued by a broker or you can value shares online using tools such as Yahoo Finance and Google Finance.

Stay tuned for more guidance on these points.

Valuing joint assets

Joint assets should be valued even if passing to the surviving joint owner. The figure declared is the deceased’s share of those assets. Stay tuned for more guidance on this point.

Swearing an oath

Personal representatives must swear an oath to confirm the maximum value of the estate, so it is important to be confident of the figures provided. See our guide “Swearing an oath for probate”.

Valuations if inheritance tax is due

If inheritance tax is due, there is a greater onus on the personal representatives to provide formal, written valuations wherever possible. Where inheritance tax is payable, form IHT205 cannot be used. The form required is the IHT400, submitted to HM Revenue & Customs. All assets and debts must be itemised.