When grieving families are tasked with cataloguing their deceased loved one’s possessions, they may be significantly overestimating the value of everyday items, according to a recent study. This could lead to them paying more inheritance tax than necessary.
A test conducted by a probate and chattel valuer found that over 80% of participants believed the value of common household objects was higher than their actual market worth. This discrepancy can have major financial implications for those settling an estate.
“It’s a very understandable mistake,” explained Samantha Barker, the valuer who carried out the research. “When going through a loved one’s belongings, there’s often a strong sentimental attachment that can skew our perception of an item’s true value.”
The study involved participants appraising a range of objects, from antique furniture to vintage clothing. In the majority of cases, their estimated prices exceeded the professional valuer’s assessment by a significant margin.
“We found that people tended to overvalue items by around 60% on average,” said Barker. “That can really add up when you’re talking about an entire household’s worth of possessions.”
This overvaluation can have serious financial repercussions. Inheritance tax in the UK is charged at 40% on estates worth over £325,000. By incorrectly inflating the value of assets, families may end up paying far more tax than necessary.
“It’s a common issue we see time and time again,” Barker continued. “Inheritors are already dealing with the emotional turmoil of losing a loved one. The last thing they need is the added stress and expense of an unnecessarily high tax bill.”
The findings highlight the importance of seeking professional guidance when managing an estate. Enlisting the services of a qualified valuer can help ensure that assets are accurately appraised, potentially saving grieving families thousands of pounds.
“My advice would be to not go it alone,” Barker concluded. “Work with an expert who can provide an impartial, data-driven assessment. It could make a significant difference to the amount of inheritance tax you end up paying.”
