Can anyone shed any light on how race horses are valued for IHT purposes when the investment is treated as a hobby and not a business?
We have always proceeded on the basis of the usual market valuation but a client recently queried this due to the unreliable nature of such a valuation (the example he gave is winning the grand national on the date of death and breaking his leg the next!)
There is plenty of guidance online from equine societies regarding the special income/CGT/VAT rules which apply to race horses but we can’t seem to find any guidance in relation to inheritance tax.
Your example of a horse breaking its leg applies with equal force to other chattels. A painting or vase could be worth £1million at the date of death and be accidentally destroyed the next day (hopefully it was still insured!). It is the market value at the date of death that is important, and horses are no exception. Neither are horses any more or less difficult to value than other chattels, all you can do is ask the opinion of someone who can be expected to have sufficient knowledge. I wonder how HMRC would go about checking the value, I don’t think the DV has a specialist horses valuation unit?
Thanks Paul, this is how we have always proceeded too but given the special CGT protection for race horses wondered if anyone had come across anything similar for IHT.
Rachel Sugden
Harrison Clark Rickerbys