14,000 grieving families are the target of inheritance tax investigations for underpayment

After a government crackdown on underpayments, HMRC looked into inheritance tax bills for a third more families in the three years ending in April 2025

Since April 2022, HMRC has opened more than 14,000 investigations into families suspected of underpaying inheritance tax, according to a Freedom of Information (FOI) request.

The number of new inheritance tax investigations initiated by the tax authority during the first nine months of this tax year has also sharply increased, according to the FOI data.

According to data obtained from HMRC by financial advisor NFU Mutual, 3,636 probes have been opened in the current 2025 - 2026 tax year alone.

Nearly 25% of all IHT investigations opened since April 2022 are those that were started between April 2025 and December 2025.

In the three years leading up to April 2025, the number of new inheritance tax investigations into estates where the tax is thought to have been underpaid increased by 33 percent, from 3,163 in 2022 - 2023 to 4,200 in 2024 - 2025.

In the years to come, more families will likely be brought under the inheritance tax purview, which may result in more HMRC inquiries into alleged underpayment of IHT.

Any inheritance over the 325,000 tax-free threshold (also referred to as the nil rate band) is subject to 40% inheritance tax. An extra 175,000 allowance is applied if a house is being passed to children or grandchildren. Couples can transfer a total of £1 million tax-free by combining their allowances.

"IHT remains one of the most feared and least understood taxes, with unspent pensions falling within the inheritance tax net from 2027 and many farms and businesses from April 2026, more and more families will find themselves dragged into paying inheritance tax," stated Sean McCann, chartered financial planner at NFU Mutual.

According to the Office for Budget Responsibility (OBR), inheritance tax bills may result from 9.5 percent of deaths by 2029 - 2030, up from 5.1 percent in 2022 - 2023.

As more families share some of their inheritance, HMRC's latest data shows that IHT receipts collected between April 2025 and January 2026 increased by 130 million when compared to the same period in the 2024 - 2025 fiscal year. This increased to a total of 7.1 billion in the first 10 months of the current 2025 - 2026 tax year.

The majority of people pay the correct amount of inheritance tax, according to an HMRC spokesperson. Investigations can be launched in situations where it is believed that someone has not in order to resolve problems and guarantee that the system is still fair. A "

How does inheritance tax get looked into by HMRC?

When there is a suspicion that inheritance tax has been underpaid due to an error, omission, or undervaluation of assets, HMRC will use its extensive investigative powers to look into a variety of sources and create a picture of the deceased person's financial situation, McCann said.

This can involve looking through bank statements to find income that might indicate the presence of hidden assets like real estate or investments, or large foreign exchange transactions.

McCann went on to say: "HMRC conducts thorough investigations.

For instance, they will consider expenses like gifts given within the seven years prior to death or life insurance premiums, which, if not written in trust, will be included in the taxable estate.

"The amount of money recovered from these investigations is substantial, and the increasing asset values and possible amounts at risk seem to support HMRC's decision to examine more cases. According to McCann, HMRC is also able to be more forensic and focused due to the greater amount of information at their disposal.

Additionally, the interest rate on past-due inheritance taxes is 7.5 percent, which can significantly increase the amount of the bill. This can exacerbate a situation that is already difficult and upsetting for many people.

"More families will be caught in the inheritance tax net with ever-increasing bills for those affected," McCann continued, adding that the 325,000 and 175,000 residence nil-rate bands would remain frozen until 2031.