How to value your estate for Inheritance Tax purposes

IHT assets

To value an estate for IHT purposes you need to list out all the assets and work out their value at the date of death.

Common assets include the following:
(this is not a full list)
Money
Property & land
Jewellery
Cars
Shares
Household goods
Works of art
Collections

You can then deduct the value of any debts and liabilities, such as mortgages, credit card debts, household bills and funeral expenses.

It is important to keep records of how you have arrived at the values as HMRC can ask to see records up to 20 years after the IHT is paid!

Gifts also need to be included if they were made within the 7 years before the date of death. You’ll also need to include any earlier gifts if the person who died continued to benefit from the gift, for example if they gave away their house but continued to live in it rent free. These are known as gifts with reservation of benefit.

HOW TO PAY IHT

Where there is a will it is normally the executors that work out and pay any IHT due. If there isn’t a will, the administrator will deal with the IHT.

The IHT should be paid within 6 months of the date of death and it is usually paid out of the funds in the estate. This means that assets may need to be sold to realise the cash to pay the IHT. Once the IHT has been paid, the remaining funds can be distributed to the beneficiaries.

Good executors can make interim distributions.


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