When someone dies and they have investments and other assets outside of a pensions environment, each of those assets needs to be given a value to determine the total value of the estate – and then in turn work out how much inheritance tax is due.

But it can be tricky to work out how to value some of these assets and what date you should value them from. Here is our guide to how to get accurate valuations.

INVESTMENTS IN AN ISA

This is probably the easiest one, as only funds and investments listed on recognised stock exchanges can be held in an ISA. That means their valuation will be readily available.

All you need to do is contact the provider of the ISA and ask them for a valuation, based on the price of the shares, funds and other assets at the market close on the day the person died. One thing to ensure is that you also include the value of any cash sitting in the ISA account too.

Also, if the relevant stock exchange was closed on the day of death, either because it was a weekend or a public holiday, you can base the valuation on either the last day the stock exchange was open before they died or the first day it re-opened after they died, using the lower valuation from the two.

LISTED STOCKS AND SHARES

Investments listed on a stock exchange will have an easy-to-find valuation, as they will be priced regularly. You have two options for any investments outside of an ISA: you can value them yourself or use a share valuing service.

If going through the DIY method, it’s probably easiest to set up a spreadsheet, where you can enter the name of the shares they held, the number of each and the face value of those shares.

You’ll then need to find the price of those shares on the day they died, which can be done in the financial pages of a newspaper (looking at the paper from the day after they died) or online. You then multiply the value of each share by the quantity they held, and add up the total.

If you use a professional service they will give you a quotation for the price of the shares in a range, for example 91p to 99p. You’ll then need to do some sums to work out the accurate price, a process called finding the ‘quarter-up price’.

To do this you work out a quarter of the difference between the two prices and add this to the lower price. So in the example above, the quarter difference is 2p (99p minus 91p is 8p, divided by 4 is 2p), and then you add this to the lower figure of 91p to get 93p. The final step is to multiply that figure by the number of shares owned.

One final check you need to do is to see whether a dividend was due to be paid out on the share. If the share is marked as ex-dividend then a dividend is due and will be paid to the estate of the person who died. This means you need to include it in your valuation calculations.

The dividend amount will be listed on the company website or you can use a website such as Investegate to look at the company filings, where they will say what the dividend is. As with the share valuation, you’ll then need to multiply the dividend amount by the number of shares to get the total dividend figure, and then add that to the share valuation.

For dividends due on a fund or unit trust, you’ll need to contact the fund management group directly to find out the amount that’s due. If you google the provider name contact details should be readily available.

UNLISTED INVESTMENTS

These are a little trickier to get valuations for, as they won’t be valued as regularly and nor will they be printed in a newspaper or published online. But if the deceased had shares in either a private family company or other start-up businesses that aren’t listed you’ll have to go to the company directly to get a value for the shares.

The company accountant or company secretary should be able to provide this information. A word of warning: don’t just use the face value of the shares. Often shares will be issued at a nominal
£1, but that probably won’t reflect the current value of the company. Companies’ audited annual statements can also provide an indicative net asset value.

One option is to contact HMRC’s Shares and Assets Valuation service to help verify the valuation. You can contact them on mailbox@hmrc.gov.uk or via post at Shares and Assets Valuation, HM Revenue and Customs, BX9 1BJ.

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