Introduction
HM Revenue and Customs (HMRC) has reclaimed an additional £246 million in unpaid inheritance tax over the last financial year, according to verified figures. This recovery coincides with a marked increase in investigations into inheritance tax returns, supported by the implementation of advanced digital enforcement techniques.
The expansion of enforcement activities and sustained thresholds for inheritance tax mean more estates are now subject to scrutiny, with both wealthy and modest households increasingly affected.
HMRC’s approach, combining artificial intelligence and data-matching technologies, aims to close tax gaps and improve compliance throughout the United Kingdom.
Surge in inheritance tax investigations
In the year ending April 2025, the number of inheritance tax investigations conducted by HMRC rose to 3,977, up from 3,793 in the previous year. This growth reflects HMRC's strategic focus on estates potentially underpaying inheritance tax.
Recent analysis by legal and tax professionals highlights the trend of more households, regardless of their wealth, being brought into the tax net due to asset price growth and static thresholds.
Digital tools drive tax compliance
HMRC has adopted artificial intelligence and digital data-matching tools to address inconsistencies in inheritance tax submissions. Data from external sources, such as the Land Registry and the Trust Registration Service, are now cross-referenced to confirm estate valuations provided by families.
In some cases, tools like Google Maps are employed to further verify property information. This technology-driven approach is intended to identify undervaluation and ensure returns are accurate.
Inheritance tax thresholds remain frozen
A critical factor behind increased tax investigations is the prolonged freeze of the inheritance tax nil-rate band at £325,000, in place since 2009. The threshold will remain unchanged until at least April 2028, increasing the number of estates potentially liable for the tax as property values rise.
Couples who own property may combine allowances, including the £175,000 residence nil-rate band and spousal transfer relief, to achieve a total exemption of up to £1 million in some cases.
Government receipts see sharp increase
Revenue data shows government receipts from inheritance tax reached £8.3 billion in 2024, marking a 61% increase since 2020.
During the first nine months of the current financial year, inheritance tax receipts alone totalled £6.6 billion, £232 million higher than the equivalent period in the prior year. These figures underscore the financial impact of HMRC’s bolstered enforcement and the wider inheritance tax net.
Common errors prompt investigations
Several common mistakes have been identified as frequent triggers for HMRC investigations. Failure to declare personal possessions such as jewellery, valuable furniture, and other assets often leads to inquiries.
David Lunn, a partner at TWM Solicitors, noted: “Not declaring goods has prompted countless IHT investigations in the past. Items such as jewellery or even a valuable set of dining chairs must be declared at their full market value.” Disputes over property valuations are also common between estates and the tax authority.
Final Summary
The latest HMRC figures illustrate a robust push to recover unpaid inheritance tax, driven by expanded investigations and digital oversight. With a frozen nil-rate band and wider property ownership, more households must confront the complexities of inheritance tax liabilities.
Experts warn that simple mistakes, particularly related to personal possessions and property valuations, can have expensive consequences. As regulatory scrutiny deepens, both legal professionals and families advise seeking expert guidance when preparing inheritance tax returns.
These developments highlight the importance of digital tools and regulatory vigilance in the UK’s evolving tax landscape. Those managing estates may benefit from specialist tax tools, such as the Pie app, to help navigate ongoing legislative changes.
