Inheritance tax asset valuation is an important part of managing the estate of a deceased individual. The valuation can be divided into two broad phases – with the first being the valuation of all of the assets within the estate. These can include:
- Any fully-owned assets.
- The appropriate portion of any shared assets, such as property of which the deceased was a joint tenant or tenant in common.
- Gifts with reservation – gifts given away from which the deceased still benefited, such as giving property to children while continuing to live in it without paying rent.
- Certain gifts and asset transfers during the prior seven years leading up to the death – there are many exemptions for such gifts which need to be carefully tracked.
At this point, there should be a total valuation of the potentially taxable assets. The second phase involves the following deductions from the estate:
- Repayment of remaining mortgages and loans.
- Repayment of other remaining debts and bills.
- Payment of funeral expenses.
Once this is deducted, the final sum should give you the inheritance tax asset valuation. The first £312,000 of value is tax-free; the excess value over this threshold is subject to a 40% tax rate.
For information and advice on an inheritance tax asset valuation and other inheritance matters, contact professional UK financial consultants through our online enquiry form. They will offer you a free, no obligation first consultation.