Inheritance tax (IHT) investigations could hit thousands more bereaved families as HM Revenue & Customs tightens its grip on estates.
The tax authority has launched nearly 10,000 IHT probes in just three years, with 2,606 of those still unresolved, according to data released under Freedom of Information rules.
Official figures show that HMRC opened 3,961 inheritance tax investigations in the year to April 5 — a sharp rise of 31% compared with the previous 12 months.
The clampdown comes amid soaring tax receipts. Inheritance tax brought in a record £8.2 billion last year — the fourth consecutive annual high — as rising house prices and frozen thresholds pushed more families above the limit.
Sean McCann of NFU Mutual, who obtained the figures, warned that HMRC is leaving “no stone unturned”.
He told the Telegraph: “Where there is a suspicion that inheritance tax has been underpaid through error, omission, or undervaluing assets, HMRC has substantial investigatory powers and will check a range of sources to build a picture of the deceased individual’s financial affairs.
“HMRC leaves no stone unturned in these investigations. The interest rate you pay on overdue inheritance tax stands at 8.5%, which is the highest rate for 18 years, and can add a significant amount to the bill. This can compound what for many is already a challenging and distressing situation.”
Figures show that HMRC launched 3,028 probes in 2024, only slightly below the 3,163 cases it opened the previous year. Between April and August alone, compliance checks yielded over £105 million in extra inheritance tax, largely driven by disputes over asset valuations, according to advisers at Evelyn Partners.
Experts say the increased scrutiny is adding to the burden on families already dealing with grief and complex paperwork.
The pressure is expected to mount further after Rachel Reeves’ Autumn Budget announcement that unspent private pensions will be counted towards a person’s taxable estate from 2027. This change, say analysts at Rathbones, will result in nearly a 25% increase in estates liable for IHT.
Dealing with HMRC investigations is becoming a bureaucratic ordeal. Executors, often relatives of the deceased, must calculate the estate’s value, complete tax forms and respond to complex questions — all within six months, or face interest charges and penalties.
Paul Barham, Partner at Forvis Mazars, warned that “perceptions of IHT being a preserve of the wealthy are set to change”.
He said: “With the IFS predicting that by 2029–30, the share of deaths liable for inheritance tax will reach its highest level in over 50 years, a combination of frozen thresholds, as well as changes to Business and, controversially, Agricultural Property Relief are putting more pressure on an increasing proportion of families”
An HMRC spokesman 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.”
