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HMRC is ramping up its scrutiny of property valuations as part of a clampdown on Inheritance Tax avoidance.<\/p>\n
The number of cases referred to the Valuation Office Agency (VOA) has risen 23.5% in the past year. HMRC has confirmed to The Neg referrals to the VOA were up from 11,845 to 14,631, in the 12 months to 30th September 2025.<\/p>\n
There has been a noticeable shift towards questioning figures submitted in IHT returns, rather than accepting them at face value.<\/p>\n
Tax returns scrutiny<\/p>\n
Increasingly, HMRC is bringing in the VOA to help with its scrutiny of Inheritance Tax returns reflecting a strengthening of its efforts to recover revenue from under-reported and mis-valued estates.<\/p>\n
Previously, lawyers would have been contacted by the VOA about a probate valuation \u201conce or twice every few years\u201d, and is now said to be happening more frequently, according to law firm TMW Solicitors.<\/p>\n
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Laura Walkley, Head of Private Client, TWM Solicitors<\/p>\n
Laura Walkley, Head of Private Client at TWM, said: \u201cHMRC is clearly focusing on property valuations as a significant potential source of revenue. There has been a noticeable shift towards questioning figures submitted in IHT returns, rather than accepting them at face value.\u201d<\/p>\n
She added that executors of estates need to take expert advice so that they know exactly what HMRC requires from them when it comes to including a property valuation in an IHT return.<\/p>\n
If an executor fails to report a property value properly, there can be financial consequences for the estate.\u201d<\/p>\n
\u201cIf an executor fails to report a property value properly, there can be financial consequences for the estate such as additional tax and interest to pay \u2013 potentially by the executor personally. You are advised to use a proper valuation from a RICS valuer rather than an estimate from a high street estate agent,\u201d she said.<\/p>\n
Rising house and asset prices and frozen tax thresholds have resulted in more people having to pay IHT.<\/p>\n
HMRC\u2019s use of AI, data matching and other advanced big data tools, is also increasing its ability to identify inconsistencies and errors in IHT returns.<\/p>\n
Record \u00a38.5bn receipts<\/p>\n
Inheritance Tax (IHT) has quietly become one of the Britain\u2019s most significant property taxes as house values rise and frozen thresholds drag increasingly more people into the tax net.<\/p>\n
IHT receipts hit \u00a38.5billion, according to the latest figures published yesterday by HMRC. Revenue has climbed to a record \u00a38.5billion for the 2025 to 2026 tax year, marking a fifth consecutive annual high.<\/p>\n
Receipts rose \u00a3200million on the previous year, with March alone generating an eye-watering \u00a3755million.<\/p>\n
Inheritance tax<\/p>\n
The main nil-rate band has been fixed at \u00a3325,000 since 2009, and has now been frozen until at least April 2031, meaning more and more homeowners are becoming liable for the tax as the value of their homes rises.<\/p>\n
For many households, the family home is by far their largest asset, and in the more expensive regions, even modest properties can push estates beyond the threshold, after which the 40% IHT rate kicks in.<\/p>\n
An HMRC spokesperson said: \u201cThe majority of people pay the correct amount of Inheritance Tax. As has always been the case, where it is suspected an individual has not, investigations can be opened.\u201d<\/p>\n