Accurate probate values are key to assessing inheritance tax (IHT) liabilities on farms, especially when they include development potential or working machinery. Julie Butler FCA, partner at Butler & Co explains the tax implications
Many farms have barns full of a lifetime of farming memorabilia which sometimes might be known as farm ‘junk’. On death, the farmer’s property must be valued for IHT at ‘the price [it] might reasonably be expected to fetch if sold in the open market at that time’ under s160 Inheritance Tax Act 1984 (IHTA 1984). The executor will be faced with a number of problems in that regard and recent guidance has helped with direction as to when a professional valuation is needed.
As noted in the August 2018 edition of its trusts and estates newsletter, HMRC has provided updated guidance on valuing individual items within an estate. Previous guidance across both excepted and non-excepted estate regimes varied, but broadly suggested that professional valuations should be sought for any individual item above £500.
