What the figure has to answer
Jewellery on a probate return is entered at open market value at the date of death. The basis is statutory and it runs to a single sentence. Section 160 of the Inheritance Tax Act 1984 fixes the value of any property at its open market price on the day in question, and then closes off the obvious objection: “that price shall not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time”.
That closing clause is the one executors trip over. A box of twenty rings cannot be discounted for the fact that twenty rings are being sold at once. Each piece carries its own open market figure and the figures are added.
The insurance schedule in the same drawer answers a different question and gives a higher number. HMRC’s guidance on how it values household goods says so in terms: a valuation on any other basis “may not satisfy the terms of S160”, and “a valuation ‘for insurance purposes’ using replacement values may include too high a value”. The same guidance tells the caseworker that where a report is described as being for probate purposes, they should confirm the open market basis was used. The probate valuation guide sets out the gap between the two figures for contents generally, and what a written report costs.
So when instructing a jeweller or a valuer, ask in writing for the open market value at the date of death in the terms of section 160.
The metal floor, read off the fineness mark
Every gold, silver or platinum piece has a floor, which is the metal in it, and the fineness mark gives the proportion. Schedule 2 to the Hallmarking Act 1973 lists every standard a British assay office marks. These are the ones that turn up in jewellery.
| Mark | What it means | Pure metal in one gram of the piece |
|---|---|---|
| 375 | 9 carat gold | 0.375 g |
| 585 | 14 carat gold | 0.585 g |
| 750 | 18 carat gold | 0.750 g |
| 916 | 22 carat gold | 0.917 g |
| 925 | Sterling silver | 0.925 g |
| 950 | Platinum | 0.950 g |
Two rings of identical weight, one marked 375 and one marked 750, hold gold in the ratio of one to two before a stone is counted. Weigh each piece on a scale reading to 0.01 grams, subtract anything that is not metal, and multiply.
The benchmark to multiply by is the one for the date of death, not today’s: metal moves far enough between a death and a return to change the figure. For silver, the scrap calculator gives the current benchmark and the silver price page carries a twenty-year chart for reading a past day, while the 925 page covers what sterling is worth by weight and the small-article exemption that leaves a thin chain legally unmarked. Both tools read silver only and neither carries a gold line, so a gold piece has to be priced against the London gold benchmark for that date by hand.
Stones, pearls, enamel, base metal clasps and the resin in a hollow bangle all come off before a refiner quotes, and a refiner pays under the benchmark rather than at it, so the melt figure is a floor rather than an offer.
The marks that date a piece to a span of years
British gold marks changed enough times that a fineness mark alone dates some pieces to within a few decades. The Goldsmiths’ Company Assay Office sets the dates out in its history of hallmarking.
| What is struck | What it dates the piece to |
|---|---|
| A crown with the figure 18 | 18 carat, marked this way from 1798 |
| A crown with the number 22 | 22 carat, recognised with its own marks in 1844 |
| 15 carat or 12 carat | 1854 to 1932 only. Both standards were introduced in 1854 and cancelled by Order in Council in 1932, replaced by 14 carat |
| An orb surmounted by a cross | Platinum, marked in Britain from 2 January 1975 |
| Two circles each with a section cut out | A wartime utility wedding ring. A 1942 Board of Trade order held gold wedding rings to 9 carat and under 2 pennyweights, which is 3.11 grams |
A 15 carat mark is the most useful of those to an executor, because it fixes a piece inside a 78-year window. Gold wedding rings became liable for hallmarking in 1855, so an unmarked band is either earlier, foreign or under the exemption weight.
Stones: what a saleroom prices and an insurer does not
A saleroom prices a diamond on its weight, colour, clarity and cut, and a report from a recognised gemmological laboratory settles all four before the bidding starts. Without a report the stone is described cautiously, and cautious descriptions fetch less.
The same is true of pearls from the other direction. A laboratory separates natural pearls from cultured ones by radiography, reading the growth structure inside the pearl rather than judging the surface, and the two are not in the same market. A string of pearls in a probate estate is worth the test before it is worth a figure.
Where the jewellery is going to be sold, the sale is the strongest evidence available. HMRC’s guidance states that “sales after the death, particularly those at auction, provide the best evidence of the open market value at the date of sale”, and that the figure it wants is the gross hammer price before commission and without the buyer’s premium. The date in that sentence is the catch: the sale evidences the value on the day it sold, not on the day of the death, and the same guidance expects the taxpayer either to substitute the sale prices or to argue for an adjustment for market movement between the two dates.
Carat, carat and the crown
Three confusions account for most of the wrong figures put on jewellery.
The word carat does two jobs. As a fineness it counts parts in 24, so 9 carat gold is 9 parts gold in 24 and 18 carat is 18. The same word also measures a stone, where one carat is 0.2 grams and tells you nothing about the metal around it. A one carat diamond in a 9 carat mount is a common combination, and the two numbers have no bearing on each other.
A crown in the row is a gold mark when it stands beside a fineness figure, and a Sheffield town mark when it stands in a silver row struck before 1975, after which Sheffield used a rose instead, as the Sheffield page explains. The reverse trap is older: until 22 carat gold was given its own marks in 1844, the assay offices struck it with the silver marks, so a lion passant on a Georgian gold piece is not a mistake.
Then there is gold that is not gold through. Rolled gold, gold filled, gold plated and marks such as 9ct gold front describe a gold skin over base metal. No assay office struck any of them, so none is a hallmark, and the scrap value of the lot is close to nothing.
Which pieces go on their own line
Form IHT407 asks for jewellery item by item only above a threshold; everything under it joins the single total with the furniture. The IHT407 guide gives the boxes, the £1,500 line and the question about items listed individually on the household insurance policy.
Two points sit outside the form. The value entered becomes the base cost if the piece is later sold, which the selling guide works through with the capital gains threshold for personal possessions. Jewellery the deceased owned jointly with somebody else is reported on IHT404 instead.
Before anything leaves the house
Photograph every piece against a plain background with a ruler beside it, then take the marks close up, because a mark too small to read in the photograph is a mark that will be argued about later. Weigh each piece and write the weight on the photograph.
Keep the insurance schedule, the receipts and any laboratory report with the photographs. A replacement valuation is the wrong figure for the form and good evidence that the piece existed and what it was.
Nothing gets cleaned, a suite of matching pieces stays together, and no single ring leaves with a house clearance firm before the list is written. The house clearance guide covers the order in which rooms should be emptied, and the rest of the probate section covers the steps either side of the valuation.
