What Are Personal Chattels? The Legal Meaning and How They Are Valued

For deaths on or after 1 October 2014, personal chattels are defined by section 55(1)(x) of the Administration of Estates Act 1925 as amended by the Inheritance and Trustees' Powers Act 2014. The definition reads: tangible movable property, other than any such property which consists of money or securities for money, or was used at the death of the intestate solely or mainly for business purposes, or was held at the death of the intestate solely as an investment.

The older definition, which still governs wills that expressly adopt it and deaths before October 2014, was a list: carriages, horses, stable furniture and effects, motor cars and accessories, garden effects, domestic animals, plate, plated articles, linen, china, glass, books, pictures, prints, furniture, jewellery, articles of household or personal use or ornament, musical and scientific instruments and apparatus, wines, liquors and consumable stores. The 2014 rewrite was intended to cover the same ground in modern language and to settle arguments about items the Victorian list never imagined.

Under the current definition the category is broad. It includes:

Three exclusions do the work. Money and securities for money are out: cash, bank balances, Premium Bonds, shares and the like are not chattels. Items used at the death solely or mainly for business purposes are out, so a self-employed joiner's van and tools are not personal chattels even though the same items in a hobbyist's garage would be. And items held at the death solely as an investment are out, which is where disputes arise.

The investment exclusion is narrow. A painting bought because the deceased liked it and expected it to hold its value is a chattel; gold bars kept in a safe as a store of wealth are not. A wine cellar drunk from is a chattel; cases held in bond and never opened are more likely to be an investment. The test is the deceased's purpose in holding the item, and the executor may need to take a view on the evidence.

Money found in the house is not a chattel, but the box it was found in is. A car on finance is a chattel, with the finance recorded as a debt. A house is land, not a chattel, though its fixtures pass with it and its loose contents are chattels.

On intestacy in England and Wales, the surviving spouse or civil partner takes the personal chattels absolutely, before the statutory legacy and the division of the residue. If there is no spouse or civil partner, the chattels form part of the residue and pass with it.

Wills commonly leave the personal chattels as a class, either outright to one person or to the executors to distribute in accordance with a letter of wishes. A gift of "my personal chattels as defined by section 55(1)(x)" adopts the statutory definition; a gift of "my personal effects" or "the contents of my house" does not, and the words then take their ordinary meaning, which may be narrower or wider. Where the will is silent on a valuable item, the definition decides whether it passes under the chattels gift or falls into residue, and the answer can move a great deal of value between beneficiaries.

Chattels are valued at Open Market Value on the date of death: what they would fetch if sold, which for ordinary household goods is second-hand value and for jewellery, art and antiques is the auction hammer price. Where the estate files form IHT400, they are reported on schedule IHT407, with jewellery worth £1,500 or more per item, every vehicle, and every antique, work of art or collection listed individually.

The valuation also matters for distribution. Where chattels are left to be divided among several beneficiaries, or where one beneficiary is to receive specific items and others cash, an independent valuation is the only fair basis for equalising the shares, and it is the figure a court will expect to see if the division is disputed.

Beneficiaries who later sell inherited chattels acquire them at the probate value. Sales for £6,000 or less per item are exempt from Capital Gains Tax; above that, the gain is limited to five-thirds of the amount by which the proceeds exceed £6,000. Cars are exempt as wasting assets. A set sold to one buyer is one asset for these rules.