How to Value House Contents for Inheritance Tax

To value house contents for inheritance tax, you take every tangible possession the deceased owned and price each one at what a buyer would pay for it second-hand on the open market as of the date of death. That figure, not the replacement cost and not what anything was worth new, is what HMRC wants on form IHT407, which sits alongside the main IHT400 return.¹²³

What Household Goods Include

Everything tangible in and around the home counts. Furniture, electronics, clothing, kitchenware, bedding, books, decorative items, garden tools, shed equipment, jewellery, antiques, and ordinary domestic bits and pieces all fall inside the household goods figure. So do vehicles: cars, motorcycles, boats, and aircraft are reported here rather than on a separate schedule.¹

The house itself, any land, bank accounts, and investments do not. They have their own schedules. Jointly owned items are also excluded from IHT407 and belong on form IHT404 instead, which is an easy detail to miss and a common source of error.⁴

When You Actually Need to Do This

Not every estate needs a full IHT400 with IHT407 attached. If the estate qualifies as “excepted,” you skip the detailed return altogether. Excepted estates typically include those under £325,000, those worth £650,000 or less using a transferred nil-rate band from a predeceased spouse, and estates that pass entirely to a surviving spouse, civil partner, or qualifying charity where the total is less than £3 million.⁵

For everyone else, a full return is needed and household goods have to be valued line by line or in aggregate depending on the category.

Open Market Value, Not Replacement Value

Section 160 says each item is worth what it would reasonably fetch if sold on the open market at the date of death, and the price does not get discounted just because selling a lot of goods at once might depress the market.² In practical terms, that means second-hand value.

This is where people go wrong. A household insurance policy values contents at replacement cost, which is almost always far higher than resale value. A sofa that cost £1,200 new might realistically fetch £150 second-hand, and £150 is the number that belongs on the form. HMRC treats auction sale prices, specifically the hammer price before commission or buyer’s premium, as the best evidence of what household items are actually worth.⁶

For ordinary furniture, appliances, clothes, and consumer electronics, checking completed sales on online marketplaces gives a workable estimate. Most of a typical home’s contents will come in far lower than the family expects, which frequently keeps the total figure modest.

Filling In IHT407

The schedule splits household and personal goods into four boxes. The sum of the four flows through to box 55 on the IHT400.⁴

Box 1 covers jewellery. List each individual jewellery item worth £1,500 or more, with a description and its open market value. Pieces below that threshold do not need itemising here.

Box 2 covers vehicles, boats, and aircraft. List all cars, including vintage and classic, motorcycles, other vehicles, boats, and aircraft with individual values.

Box 3 covers antiques, works of art, and collections. Antique furniture, paintings, sculptures, porcelain, and collections of books, stamps, coins, medals, or wine are itemised here. There is no minimum value; if something plausibly belongs in this category, list it.

Box 4 covers everything else. One aggregate total for all remaining goods, including jewellery worth less than £1,500 and all the ordinary domestic contents. You do not list individual items here.

When to Get a Professional Valuation

Professional appraisals are not mandatory. For each of the specialist categories, IHT407 simply says: “If you have a professional valuation, enclose a copy.”⁴ But for anything genuinely valuable, getting one is sensible. If HMRC later queries the figure, a professional report is your evidence.

The items usually worth appraising are fine jewellery, antique furniture, artwork, rare collections, and classic cars. Whoever you instruct should specialise in that type of property, and the report should give open market value at the date of death rather than an insurance figure. Send a copy with the IHT407, not the original.⁷

Penalties If You Get It Wrong

HMRC applies inaccuracy penalties to inheritance tax returns, and household goods are not exempt. The penalty depends on the behaviour behind the error:⁸

Lack of reasonable care: 0% to 30% of the additional tax due.
Deliberate understatement: 20% to 70% of the additional tax due.
Deliberate and concealed: 30% to 100% of the additional tax due.

A good-faith estimate that turns out slightly off is unlikely to attract anything. HMRC is looking for negligence or dishonesty, not perfection. Assigning £200 to a jewellery collection that plainly contains pieces worth thousands is not a good-faith estimate. Keep notes on how you arrived at each figure, whether from online research, auction records, or a professional report. That paperwork is what protects you.

Correcting a Value After You Have Filed

If you discover afterwards that a value was too high or too low, or that an item was missed altogether, file a C4 Corrective Account. That is the mechanism for adjusting the IHT400 when new information changes the picture. The form warns that false information can lead to a financial penalty and prosecution.⁹

Sales shortly after death are useful evidence. HMRC treats post-death auction results as strong indicators of open market value.⁶ If items sell for materially more or less than what you reported, a corrective account is often the right move rather than waiting for HMRC to raise it.

The Knock-On Effect for Beneficiaries

The probate value you assign is not just an inheritance tax number. It becomes the beneficiary’s base cost for capital gains tax if they later sell the item. Any appreciation during the deceased’s lifetime is wiped out at death, and the beneficiary’s taxable gain runs only from the probate value forward.

That creates a temptation in both directions. Push the value up and the estate pays more inheritance tax now, but the beneficiary has a higher base cost and a smaller future gain. Push it down and it works the other way. The right answer is neither: report the genuine open market value, which satisfies both taxes honestly and keeps HMRC penalties off the table.

1
HM Revenue & Customs. Inheritance Tax: Household and Personal Goods (IHT407)
2
Legislation.gov.uk. Inheritance Tax Act 1984 – Section 160
3
GOV.UK. Inheritance Tax Thresholds and Interest Rates
4
HM Revenue & Customs. IHT407 – Household and Personal Goods
5
GOV.UK. How to Value an Estate for Inheritance Tax and Report Its Value
6
HM Revenue & Customs. Inheritance Tax Manual – IHTM21041 – Valuation and Technical Issues: How We Value Household Goods
7
GOV.UK. Inheritance Tax Account (IHT400)
8
GOV.UK. Penalties: An Overview for Agents and Advisers
9
GOV.UK. C4 Corrective Account