Inheritance Tax Investigations Net HMRC an Extra £246m From Bereaved Families
•February 8, 2026
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Why It Matters
The aggressive, technology‑driven enforcement raises compliance costs for heirs and signals tighter fiscal pressure on high‑net‑worth families, reshaping estate planning strategies.
Key Takeaways
- •Investigations rose to 3,977, netting £246 million.
- •AI and big‑data tools boost HMRC detection capabilities.
- •Nil‑rate band frozen since 2009, while asset values surge.
- •New rules pull pensions and reduce reliefs into IHT scope.
- •Property valuation disputes remain primary friction point.
Pulse Analysis
The inheritance‑tax landscape in the UK has shifted dramatically as the nil‑rate band remains stuck at £325,000 while house prices and other assets have surged. This mismatch means that estates previously exempt now face significant liabilities, creating a wave of unexpected tax bills for families that inherited modest homes or modestly valued portfolios. The fiscal pressure is amplified by recent budget decisions that broaden the definition of taxable assets, pulling in pension pots and curtailing long‑standing reliefs for agricultural and business property.
HMRC’s enforcement arsenal has evolved in step with these pressures. Leveraging artificial intelligence, sophisticated data‑matching, and sources ranging from Land Registry records to Google Maps, the agency can pinpoint undervalued properties and undeclared personal items with unprecedented accuracy. This tech‑driven approach not only accelerates the opening of investigations but also raises the stakes for non‑compliance, as penalties can quickly climb into the tens of thousands. For advisers and executors, the message is clear: meticulous documentation and professional valuation are now essential to avoid costly disputes.
The broader market impact is twofold. First, the heightened risk of investigation is likely to spur a surge in demand for specialist inheritance‑tax advice, as families seek to navigate the complex, expanding ruleset. Second, the perception of an increasingly punitive tax environment may encourage more aggressive avoidance schemes, prompting policymakers to balance revenue goals against potential erosion of public confidence. Stakeholders should monitor forthcoming budget statements for further threshold adjustments and consider proactive estate‑planning measures, such as gifting strategies and trust structures, to mitigate exposure under the evolving IHT regime.
Inheritance tax investigations net HMRC an extra £246m from bereaved families
Why is the number of IHT investigations rising?
More families were put under scrutiny by HMRC last year over what the taxman believed to be outstanding inheritance tax bills, and it successfully clawed back almost £250 million in unpaid inheritance tax.
The number of investigations into under‑paid inheritance tax (IHT) rose from 3,793 to 3,977 over the course of the year ending 5 April 2025, a new Freedom of Information request to HMRC by TWM Solicitors found.
“Tax rules are growing ever more complicated, and the IHT net widening with each Budget, people need to ensure they obtain proper advice. Penalties can run into tens of thousands of pounds.”
HMRC is now using artificial intelligence, data‑matching and other advanced big‑data tools to detect unpaid tax, TWM Solicitors has found. As a result it is getting increasingly adept at identifying inconsistencies and errors in IHT returns, prompting a growing number of investigations.
Rising house prices and asset prices, combined with frozen tax thresholds, have resulted in more people having to pay inheritance tax, and also increase the potential for evasion.
Since April 2009, the IHT nil‑rate band has been frozen at £325,000. This is a marked difference to the not‑so‑distant past – since 1986 the tax threshold rose every year until 2009 (except in 1993 and 1994). That is 21 rises in 23 years followed by no rises in 17 years, with no increases predicted in the near future.
Lawyers have said a sharp increase in the burden of any tax can lead to a rise in tax evasion and avoidance.
The government’s decisions to bring unspent pension pots into the scope of IHT and cut agricultural and business property reliefs will likely drag more estates into the tax net, TWM said. The firm expects this could trigger further HMRC scrutiny of families’ inheritance‑tax filings.
“Inheritance tax investigations have risen because HMRC knows that, as the extent of IHT widens, irregularities become more common, and so the amount of tax, interest and penalties they can recover is likely to rise,” said Lunn.
“Recent Budgets are a good example, as they have drawn even more assets into the scope of IHT. That inevitably leads to more challenges and investigations.”
Why does HMRC investigate inheritance tax returns?
HMRC investigates what it believes are errors in inheritance‑tax returns. These errors commonly include failing to declare personal items such as jewellery and furniture – assets many people do not realise must be included.
“Not declaring goods has prompted countless IHT investigations in the past,” Lunn said.
“HMRC is very strict about what must be included in an IHT return, so items such as jewellery or even a valuable set of dining chairs must be declared at their full market value,” he added.
However, some of the biggest – and most complex – disputes between families and HMRC revolve around residential‑property valuations, which remain a “significant area of friction between HMRC and estates that have to pay IHT”.
The freeze in IHT thresholds has been particularly painful for homeowners, as property prices have risen sharply in recent years.
HMRC has become increasingly sophisticated in identifying underpayments. To challenge undervalued properties, for example, the taxman is reportedly drawing on data from the Land Registry, the Trust Registration Service and even Google Maps.
“The IHT threshold was originally set so that only families with significant assets would pay the tax. But after years of being frozen, even families with a relatively modest home are now finding they owe IHT,” Lunn said.
An HMRC spokesperson said: “The majority of people pay the correct amount of inheritance tax. In cases where it is suspected someone has not, investigations can be opened to address issues and ensure the system remains fair.”
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