Four thousand inheritance tax (IHT) investigations resulted in the recovery of millions in unpaid tax, according to HMRC in recently published figures analysed by TWM Solicitors.
HMRC is understood to be reclaiming underpaid IHT, seeking data from other government and large agencies including the Land Registry, the Trust Registration Service and Google Maps, to investigate where discrepancies might be occurring. Reports suggest investigations carried out by HMRC last year led to £246 million recovered through inheritance tax compliance activity.
The data highlights how frozen inheritance tax thresholds have brought increasing numbers of estates into the IHT net. For parts of London and the south-east, even a relatively modest family home is now enough to trigger an IHT payment.
Timescales on payment are also placing considerable pressure on executors, often navigating the complex system for the first time. Tight timescales can also result in ‘best guess’ valuations of the estate at the date of death used to meet the deadline, TWM Solicitors warned. As the sale of property sometimes comes years later, if at all, many estates are being under or overpaid.
The current threshold of assets above £325,000 subject to 40% inheritance tax, or £500,000 if a home is left to children or grandchildren, has been fixed since 2009 and is set to remain until at least 2028. By combining their allowances, married couples and civil partners can effectively transfer up to £1 million without incurring tax. However, the number of estates caught by IHT is set to increase from April 2027, when pensions are set to be brought into the inheritance tax net.
Personal items, such as jewellery, antiques and furniture are particularly susceptible to mis-valuation or, in some cases, omission. Lifetime gifts also frequently lead to disputes or compliance checks, particularly where records are incomplete. As executors are personally responsible for ensuring the correct amount of tax is paid, if an estate is distributed and a shortfall later identified, HMRC can pursue executors for the outstanding balance.
At the same time, falling asset values, particularly in relation to property, have resulted in HMRC processing an increasing number refunds on overpaid IHT. Executors can reclaim overpaid inheritance tax if a property sells for less than its estimated value within four years; for shares, the refund must be claimed within a year. Executors must apply to HMRC for the refund using IHT38 (for property) or an IHT35 (for investments) form, and may also be able to claim interest at 2.75pc.
According to The Telegraph, which analysed data received from HMRC, more than 6,000 estates received refunds last year, amounting to more than £300 million.
In August 2025, the government said it is reducing delays by training and deploying additional staff to work on inheritance tax. It is investing £52 million to digitalise the service from 2027–28, it added, “to make returns and payments simpler and faster”.
