HMRC has provided revised guidance on the use of inheritance tax (IHT) form 407 to assess potential tax liabilities on household and personal goods
Executors should use form IHT407 to inform HMRC about the deceased’s household and personal goods to be taken into account when assessing IHT liability.
The form should not include details of jointly-owned goods. These should instead be provided in IHT404.
Examples of goods that must be declared include antiques, jewellery, cars and boats, as well as furniture and domestic items.
HMRC guidance states that it is not necessary to get a professional valuation for ordinary household and personal goods where publically available data can be used to estimate the value, for example, to value second hand cars.
If the value is not estimated, the open market value at the date of death, not an insurance or replacement value, must be used. The open market value is the realistic selling price for the item reflecting the price the item would have been likely to fetch if sold at auction or advertised for sale.
For items worth more than £1,500, HMRC recommends securing a professional valuation, albeit it is important to stress to the valuer that this is for the open market value of the items at the date of death. Certain awards given to the deceased for gallantry, such as the Victoria Cross, are excluded from IHT.
HMRC form IHT407 updated 27 July 2018
Report by Rob Munro