HMRC recovered more than £1.36bn in unpaid inheritance tax during the past five years, with collections in the last financial year down 13% on previous year, according to new figures obtained by financial advice firm NFU Mutual.
HMRC launches investigations into the estates of deceased individuals where underpayment of inheritance tax is suspected.
The amount of inheritance tax recovered following investigations was £247m in 2024/25, down from £285m in the previous year, and comes at a time when the total amount of IHT collected reached a new annual high of £8.5bn in 2025/26.
According to Sean McCann, Chartered Financial Planner at NFU Mutual: ‘’ Where there is a suspicion that inheritance tax has been underpaid through error, omission or undervaluing assets, HMRC has substantial investigative powers and will check a range of sources to build a picture of the deceased individual’s financial affairs.
‘’Bank statements can be a rich vein for an HMRC investigator as they can reveal income from undisclosed assets such as overseas property or investments, as well as outgoings such as life insurance premiums, which if not written in trust will be included in the taxable estate’’.
’HMRC will often review the deceased’s insurance records as part of their investigations, to ensure jewellery, wine collections and other high value items have been included in the IHT return’’
‘’Insurance records can also highlight items that have been gifted more than seven years ago but the deceased continued to enjoy a benefit from, such as a valuable painting remaining in their home. This ‘reservation of benefit’ can mean that the item is included in their Inheritance tax calculation.
He explains: “In addition, the interest rate you pay on overdue inheritance tax stands at 7.75%, which can add a significant amount to the bill. This can compound what for many is already a challenging and distressing situation.
“With the £325,000 nil-rate band and the £175,000 residence nil-rate band frozen until 2031, and pensions set to be included in the inheritance tax calculation from April next year, more families will be caught in the net with ever increasing bills for those affected.”
Although the figures reveal that the sums collected from IHT investigations have fallen, according to Sean McCann, this doesn’t mean a change in tack from the authorities:
“Investigations can take months and occasionally years to complete, and therefore the £247m recovered in 2024/25 may be from inquiries opened in earlier years.
“The revenue recovered through these investigations is significant and the rising value of assets and the potential sums at stake would appear to justify HMRC spending more time looking at individual cases.
“Inheritance tax remains one of the most feared and least understood taxes,” he added.
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