Help with inheritance tax
Our money guidance team has decades of experience in inheritance tax and estate planning. As a Which? Money member you get unlimited access to them via phone included in your subscription.
Find out more6 inheritance tax mistakes that could trigger an HMRC investigation
HMRC opened almost 5,000 inheritance tax investigations last year
With a background in financial journalism across national titles, Ruby loves helping people take control of their money and specialises in pensions, tax, banking and benefits.
The number of inheritance tax (IHT) investigations opened by HMRC has reached a six-year high according to new data.
During the 2025-26 tax year, the tax office opened 4,940 formal IHT investigations, which is an 18% increase on the previous year. At the same time, nearly 5,000 further estates were referred to HMRC's compliance team for review before a formal investigation was opened.
An HMRC enquiry can mean months of paperwork, requests for detailed documentation, and unexpected tax bills, interest, or penalties for your loved ones.
Here, we explain why investigations are rising and six inheritance tax mistakes you can avoid right now to protect your estate.
Why are IHT investigations rising?
In the 2024-25 tax year, HMRC collected £247m in unpaid IHT, with more than £1.36bn recovered over the past five years.
The data – obtained through a Freedom of Information (FOI) request from insurer NFU Mutual – comes at a time when the total amount of IHT collected reached a new annual high of £8.5bn in 2025-26.
The tax office is under pressure to clamp down on non-compliance and boost tax takings, with measures included in recent Budgets to help it do this.
More households are being dragged into the net of IHT due to the frozen threshold of £325,000, which has remained at the same level since 2009, and rising house prices.
- Find out more: how does HMRC investigate underpaid inheritance tax?
6 inheritance tax mistakes to avoid
The higher number of investigations does not necessarily mean more people are deliberately avoiding tax. Many enquiries arise because HMRC needs further information before it is satisfied that an estate has been valued correctly. Overall, 60% of compliance checks resulted in no changes.
While your executor will be responsible for completing your inheritance tax return after you die, there are steps you can take now to make the process easier and reduce the likelihood of your estate being investigated.
According to the legal advisory firm Quastels, some of the most common mistakes include:
1. Undervaluing property
Property is usually the biggest asset in an estate, making its valuation a top trigger for an IHT enquiry. HMRC is likely to double-check a property if:
- The property is valued noticeably below local market rates.
- It wasn't professionally valued.
- Development potential was left out.
- Comparable sales point to a higher price.
Hiring a qualified surveyor to provide an independent valuation can help ensure your property is valued accurately and provide evidence if HMRC later questions the valuation.
- Find out more: how inheritance tax will apply to pensions.
2. Not keeping records of lifetime gifts
Under the seven-year rule, large gifts – known as potentially exempt transfers (PETs) – only become tax-free if you survive seven years after giving them.
If you die within that window, the gift is taxed on a sliding scale from 40% down to 8% depending on the timing.
More importantly, these gifts eat into your £325,000 tax-free allowance first, in the order they were given. This can leave the rest of your estate – like your home or savings – fully exposed to IHT.
Your executor must declare all qualifying lifetime gifts on the inheritance tax return, including cash or property transfers, trust payments and gifts made shortly before death, even if no tax is owed.
Keeping a record of significant gifts – including when they were made, who received them and their value – can make it much easier for your executor to complete the return accurately.
- Find out more: ways to avoid inheritance tax.
3. Continuing to benefit from gifted assets
Transferring assets to loved ones is a popular way to reduce IHT liabilities, but you need to be aware of HMRC's 'gift with reservation' rules.
If you give away legal ownership of an asset but continue to use, enjoy, or benefit from it, the tax office may treat the asset as if it still belongs to you – meaning its full value remains in your estate for tax purposes. Common examples of this include:
- gifting your home to your children but continuing to live in it rent-free (or paying below-market rent)
- transferring a holiday home while continuing to use it for personal getaways, even infrequently
- gifting high-value assets like artwork, classic cars, or vintage wine, but storing or displaying them on your property.
If you want an asset to fall outside your estate for inheritance tax purposes, you generally need to stop benefiting from it – or pay a full market rate where appropriate.
- Find out more: inheritance tax calculator.
4. Not keeping track of all your assets
Your executor must accurately report everything you own when completing the inheritance tax return. Even an honest oversight can cause delays and trigger an investigation.
Keeping an up-to-date record of your assets – including bank accounts, investments, property and valuable possessions – along with supporting paperwork, can make the process much easier.
Find out more: inheritance tax on property.
5. Leaving inconsistent records
Leaving clear, accurate records can help your executor submit consistent information to HMRC.
Even small inconsistencies between property valuations, asset values and supporting paperwork can raise a red flag and trigger an investigation, so keeping your records organised and up to date can help avoid unnecessary questions.
- Find out more: 5 inheritance tax rules to know when gifting money in 2026.
6. Forgetting about overseas assets
Cross-border finances can add complexity to estates when it comes to IHT.
While non-UK residents only pay IHT on UK-based assets (like local property or bank accounts), long-term UK residents are taxed on their entire worldwide estate – including foreign property, offshore accounts, foreign investments, and non-UK trusts.
Under the rules introduced in April 2025, an individual is classified as a long-term resident if they were a UK tax resident for at least 10 of the previous 20 tax years before the tax year of their death. If the deceased met this threshold, every global asset must be declared on the IHT return.
If you own overseas assets, make sure your executor knows about them and where the relevant paperwork is kept. While double-taxation treaties often allow executors to reclaim tax paid overseas, failing to declare foreign holdings upfront could trigger an enquiry.
- Find out more: inheritance tax: thresholds, rates and who pays.
What happens if HMRC investigates your estate?
If HMRC opens a compliance check or enquiry after your death, your executor will receive a letter explaining what information is needed.
Receiving a compliance check doesn't automatically mean your executor has made an error or that fraud is suspected. Many enquiries simply involve requests for additional information or clarification.
However, because executors can be held personally liable for returns submitted without reasonable care, they should avoid rushing to respond before checking the facts. Instead, they should read the notice carefully, gather the relevant financial records and, if the estate is complex, consider consulting a specialist tax adviser or probate solicitor.
- Find out more: inheritance tax and trusts.
