What is being valued, and on what basis
When someone dies, their executor has to report the value of the estate to HM Revenue and Customs to work out whether inheritance tax is due. Household and personal goods are reported on form IHT407, which accompanies the full IHT400 return. The basis is open market value at the date of death: the price the goods would fetch if sold on the open market on that day, which in practice means at auction, after costs.
That is a different figure from an insurance valuation, which is the cost of replacing the item new or with an equivalent, and is much higher. Using insurance values for probate overstates the estate and can create a tax bill that need not exist.
What the form asks
IHT407 asks for jewellery, vehicles, boats and aircraft, antiques, works of art and collections, and then for everything else as a single sum. Higher-value items are listed individually with a description and a value. The form asks whether items have been valued professionally and by whom, and whether anything has been sold since the death and for how much.
When the executor can do it alone
For a house of ordinary furniture, with no antiques, no jewellery of note and no collections, the executor can put a sensible figure on the contents without a professional. HMRC’s guidance accepts a reasonable estimate for ordinary household goods, and a used-furniture figure is what the market would pay. Photograph everything before it is moved.
When a professional is needed
If the estate is anywhere near the inheritance tax threshold, if there is jewellery, silver, pictures, a collection or antique furniture, or if the beneficiaries are likely to disagree, get a written valuation from an auction house or a valuer who is a member of the Royal Institution of Chartered Surveyors or a recognised trade body. A written probate valuation costs a few hundred pounds for a typical house, is accepted by HMRC without argument, and protects the executor, who is personally responsible for the accuracy of the return.
Most auction houses waive or reduce the fee if the contents are later sold through them. Ask.
The mistakes that cost money
Overvaluing. Using insurance figures, dealers’ retail prices or online listing prices instead of auction hammer prices. This inflates the tax.
Undervaluing what later sells for more. If an item valued at £500 sells for £5,000 within a short period, HMRC can revisit the return. A professional valuation of anything likely to be significant avoids the problem.
Clearing before valuing. The clearance firm takes the contents, the estate has no record, and the two pieces of Georgian silver in the sideboard go with the rest. The house clearance guide covers this.
Splitting collections. A stamp collection, a set of medals or a run of first editions is worth more together. Value it together and, if it is sold, sell it together.
Capital gains after probate
The probate value becomes the base cost for capital gains tax if a beneficiary later sells an item for more. A low probate value can therefore create a gain later. This is one more reason to get significant items valued properly rather than nominally.
Selling the contents
Once probate is granted, the executor can sell. The auctions guide explains the charges and timing, and the price records show what house contents and individual pieces have been making.
