The Valuation Standard: Open Market vs Replacement Cost
In HMRC Manual SDLTM04000, HMRC makes it explicitly clear that the valuation standard is open-market value under willing buyer / willing seller conditions.
Many taxpayers mistakenly take original purchase receipts from 5 years ago and apply a minor 10% discount. In reality, domestic furniture and carpets suffer heavy immediate depreciation:
• High street sofas and dining sets typically lose 60%–80% of retail value within 3 to 5 years.
• Second-hand fitted carpets have virtually zero salvage value outside the specific house footprint, though reasonable uninstalled replacement values of £15–£25/m² are generally accepted for good condition carpets.
• Freestanding white goods (washing machines, fridge-freezers) trade at £100–£350 on the secondary market, even if purchased for £1,000 new.
| Item Description | Typical Original Retail Price | Accepted Second-Hand Open Market Value | Depreciation Rate |
|---|---|---|---|
| Fitted Wool Carpets (4 Bed House, 3 yrs old) | £6,500 | £1,800 – £2,800 | 55% – 70% |
| Made-to-Measure Window Curtains & Blinds | £3,500 | £800 – £1,400 | 60% – 75% |
| Freestanding American Fridge-Freezer | £1,200 | £300 – £500 | 60% – 75% |
| Solid Oak Dining Table with 6 Chairs | £2,500 | £600 – £1,000 | 60% – 75% |
| Petrol Ride-on Lawn Mower | £2,800 | £900 – £1,400 | 50% – 65% |
HMRC Enquiry Procedure & The District Valuer Service (DVS)
If HMRC opens a formal enquiry under Schedule 10 Finance Act 2003, they can refer disputed chattels apportionments to the Valuation Office Agency (VOA) District Valuer Service.
The District Valuer will inspect the property or review photographic inventories. If the VOA determines that chattels were overvalued by £10,000, HMRC will issue a formal determination for the unpaid SDLT plus statutory interest from the completion date.