Posted on 21st September 2022
No one wants to pay more tax than they have to, and during the stressful period following the passing of a loved one, it is often tempting to use a free market valuation of farms when dealing with probate, but it’s not always the best option.
Formal valuations calculated by specialist chartered surveyors, such as Walter’s Rural, can be seen as an unnecessary expense. On the flip side, though, the cliche of ‘you get what you pay for’ is often found to be true in situations like this.
When it comes to probate, rigorous market appraisals are key and employing someone with real attention to detail and thorough knowledge of rural businesses can make all the difference.
Identifying whether land is agricultural or not is obviously important when there is significant taxation on the income generated by the sale of non-agricultural land. Having someone who can understand the impact of restrictions on the land registry titles or planning constraints and tenancy occupations can also work in your favour. There are many other areas where specialist knowledge is worth paying for, especially as it will reduce the valuation.
Detailed due diligence is crucial. When we value property for probate, we go into far more detail than the free market valuations that are available. We look at the structure of the business, review on-site occupancy, look at the land registry documents and ensure the valuation is accurate as of the date of the death.
In some cases, HMRC will ask the District Valuer to look at a case. In this situation, there are two main benefits of using an expert. First, a formally instructed valuer will have gone into far more detail than the free valuation, so their position is stronger. Secondly, a valuer such as Walter’s Rural can defend the valuation and liaise with the District Valuer.
It is also worth noting that HMRC guidelines advise that a professional valuer is appointed for situations like this. As the valuation of assets for probate is also used for establishing capital gains tax, it makes complete sense to follow this advice.
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