Press release featured in FT Adviser, The Telegraph, This is Money, The Express, IFA Magazine and Leeds Live.
HMRC's inheritance tax investigations brought in an additional £285 million in tax in the year ending 31 March 2024, up 14% from £254 million the previous year.
The increase in the amount of inheritance tax (IHT) collected comes despite the number of investigations falling to 3,028, down 4% from 3,163 the previous year.
IHT evasion and avoidance could increase substantially with The Chancellor pulling more families and assets (such as farms, businesses and pensions) into the IHT net in the autumn Budget.
Neela Chauhan, partner in our London office, says: “Taxpayers really resent paying tax on their inheritance – so many try to avoid paying it. But with IHT being such a major earner for HM Treasury there’s a strong incentive for HMRC to keep challenging IHT submissions that its suspicious of.”
"HMRC’s focus on inheritance tax is yielding a greater compliance take from fewer investigations – a clear sign that their efforts to clamp down on tax evasion are working.”
“The Government’s decision to dramatically increase the range of assets and estates hit by IHT in the budget could spur a new wave of evasion and avoidance of this tax – creating far more investigations for HMRC."
Chauhan says the growing complexity of IHT cases and larger sums being recovered suggests that HMRC is zeroing in on high-value estates – including estates that may have been undervalued.
With IHT thresholds remaining unchanged for the past 15 years and rapidly inflating property prices, more and more individuals are now being pulled into the IHT bracket. IHT is currently charged at a rate of 40% on estates valued above £325,000.
Neela Chauhan says: "Rising property values mean more families find themselves facing unexpected tax bills – and some are facing investigations. It’s now more important than ever to ensure your family undertakes accurate estate planning and valuations to avoid getting caught in HRMC’s crosshairs.”
Many of these investigations stem from disagreements over estate valuations or the application of reliefs, such as Business Property Relief (BPR). HMRC is increasingly investigating IHT underpayments using resources like HM Land Registry, Google Street View and data from the Trust Register Service (TRS) – which all trusts must comply with – to correctly value estates.
Says Neela Chauhan: “HMRC’s approach has become increasingly sophisticated. We’re now seeing HMRC prioritise more complex cases, particularly those where they dispute the reliefs and valuations individuals are claiming."
