HMRC IHT enquiries rise to highest level in six years

Formal inheritance tax (IHT) enquiries opened by HMRC reached their highest level in six years in 2025/26, data obtained by Price Bailey has shown.

In 2025/26, the number of IHT enquiries HMRC opened increased by 18 per cent year-on-year to 4,940.

HMRC can open a formal enquiry when it believes there is a risk that an IHT return is inaccurate or incomplete, giving the tax office powers to request documents, valuations, correspondence and explanations from executors or advisers.

Its risk assessors also referred 4,965 IHT returns to the compliance team in 2025/26, the highest level in five years.

However, Price Bailey noted that the proportion of IHT returns referred to the compliance team that result in amendments has continued to decline, with just 40 per cent of compliance checks leading to an amendment in 2025/26, down from 45 per cent in 2024/25, and from 83 per cent in 2020/21.

“HMRC is coming under increasing pressure to clamp down on non‑compliance and boost the tax take,” said Price Bailey director, Nikita Cooper.

“IHT was historically a very small component of HMRC’s overall revenues, but many more estates are being caught in the tax net every year, so it is becoming a higher priority for HMRC.

“For taxpayers, a formal enquiry can mean months of additional work at a time of bereavement. The process can entail providing detailed evidence of asset values, lifetime gifts and relief claims.

“Crucially, many formal enquiries do not lead to any additional tax, but they still impose a significant administrative and emotional burden on families who have already complied with the rules.”

Cooper added that HMRC was casting a wider net with its compliance checks, and that 40 per cent of compliance checks resulting in amendments suggested the customer compliance team needed to take “a more targeted approach”.

Price Bailey also highlighted that IHT returns are still submitted on paper and processed manually, restricting HMRC’s ability to target enquiries effectively.

“The IHT reporting system is very archaic, with paper forms being processed manually,” Cooper stated.

“By stepping up the number of formal enquiries, HMRC’s strike rate has fallen sharply. The backwardness of the system means that HMRC cannot even tell us how much tax was collected from these enquiries. In an increasing number of cases, the answer is almost certainly nothing.

“We are likely to see much greater emphasis on compliance as the number of estates eligible for IHT and the amount collected rises sharply in the coming years.

“The current paper‑based filing system is already buckling under the strain and HMRC will need to get much better at sifting out inaccurate returns from those who are doing the right thing.”

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