Inheritance tax investigations chase 14,000 bereaved families for underpayment

A woman reading a letter from HMRC about an inheritance tax investigation — Inheritance tax investigations chase 14,000 bereaved families for underpayment

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More than 14,000 investigations into families suspected of underpaying inheritance tax have been launched by HMRC since April 2022, a Freedom of Information (FOI) request found.

The FOI data also shows a sharp rise in the number of new inheritance tax investigations  launched by the tax authority during the first nine months of this tax year.  

In the current 2025/26 tax year alone, 3,636 probes have been opened, according to the figures obtained from HMRC by financial adviser NFU Mutual.

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Inheritance tax is payable at 40% on anything inherited over the £325,000 tax-free threshold (also known as the nil rate band). If a home is being passed to children or grandchildren, then an additional £175,000 allowance is applied. Couples can combine their allowances to pass on a total of £1 million tax-free.

Fresh figures from HMRC show IHT receipts collected between April 2025 and January 2026 jumped by £130 million compared to the same period in the 2024/25 financial year, rising to a total of £7.1 billion in the first 10 months of the current 2025/26 tax year, as more families part with some of their inheritance.

How does HMRC investigate inheritance tax?

HMRC has substantial investigatory powers and will check a range of sources to build a picture of the deceased individual’s financial affairs where there is a suspicion inheritance tax has been underpaid through error, omission, or undervaluing assets, said McCann.

This can include analysing bank statements to identify income which may suggest the existence of undisclosed assets such as investments or property or significant foreign currency transactions.

McCann added: “HMRC leaves no stone unturned in these investigations.”

For example, they will look at outgoings such as gifts made in the seven years before death, or premiums for life insurance policies which if not written in trust will form part of the taxable estate.

“The revenue recovered through these investigations is significant and the rising value of assets and the potential sums at stake would appear to justify HMRC increasing the number of cases they look at. The increased level of information available to HMRC also allows them to be more forensic and targeted in nature,” McCann said. 

Furthermore, the interest rate you pay on overdue inheritance tax stands at 7.75 % which can add a significant amount to the bill. This can compound what for many is already a challenging and distressing situation. 

 “With the £325,000 nil-rate band and the £175,000 residence nil-rate band frozen until 2031, more families will be caught in the inheritance tax net with ever increasing bills for those affected,” McCann added.   

Laura Miller is an experienced financial and business journalist. Formerly on staff at the Daily Telegraph, her freelance work now appears in the money pages of all the national newspapers. She endeavours to make money issues easy to understand for everyone, and to do justice to the people who regularly trust her to tell their stories. She lives by the sea in Aberystwyth. You can find her tweeting @thatlaurawrites