Value up or down?

The more an estate is worth the more inheritance tax is paid.

That is the general rule and explains an executor’s natural inclination to keep the value of a significant asset low.

In most estates that asset is the house.  So why not put the lowest possible value in the HMRC inheritance tax forms?

First, you have to be realistic.  An artificially low value rather than true market value  will not be accepted by HMRC and could result in penalties and extra tax.

Secondly, remember capital gains tax.  On death assets assume their value as at the date of death.  Suppose the house is worth between £200,000 and £250,000.  You insert £200,000 as the value.  A year later the property is sold for £250,000.  You have a gain of £50,000 and tax may be payable.

Whereas if £250,000 had been inserted as the value there would be no gain, and no tax.

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