Inheritance Tax enquiries jump by 38%

Since the change of government in 2024, we’ve seen a couple of significant changes to Inheritance Tax (IHT). Firstly, private pensions will become subject to IHT from April 2027. Secondly, from April 2026, farming families will see Inheritance Tax relief for business and agricultural assets capped at £1 million. Given this backdrop, it comes as little surprise that Inheritance Tax enquiries by HMRC have jumped by over a third.

Inheritance Tax enquiries statistics

We know that Inheritance Tax enquiries have jumped thanks to a freedom of information request by Price Bailey. HMRC data showed that there were 4,171 formal IHT enquiries during the 2024/25 tax year. This is an increase of 38 per cent from 3,028 enquiries in 2023/24.

Given that, before the COVID-19 pandemic, HMRC normally launched over 5,000 Inheritance Tax enquiries each year, it seems likely they will continue to increase year on year.

Why are there more enquiries?

It’s likely there are multiple reasons why there is a growing number of IHT enquiries. Chief among these is that the government is keen to find ways of increasing the annual tax take. Having committed to not raise Income Tax, National Insurance, VAT or Corporation Tax, Chancellor Rachel Reeves has limited options for boosting government income. It’s therefore unsurprising that HMRC is trying to raise more from IHT.

Are IHT enquiries effective?

Interestingly, although the number of Inheritance Tax enquiries has spiked, the proportion that resulted in amendments to IHT returns has fallen. In 2022/23, HMRC requested amendments to 2,645 returns (84 per cent of those investigated). In 2024/24, this figure had dropped to 2,094 returns (69 per cent of investigated returns). During 2024/25, HMRC asked for 1,885 returns to be amended – just 45 per cent of the total.

So, while the number of IHT enquiries is increasing, the proportion of those resulting in people paying more Inheritance Tax is diminishing.

Paper returns

Part of the problem HMRC has when instigating IHT enquiries is the fact that the system is largely paper based. Given the recent changes to IHT relief for farming families and the IHT threshold remaining frozen, it’s almost certain that the number of IHT returns HMRC processes will increase.

That said, it’s highly possible that the system will move online over the coming years. HMRC has recently been awarded £500 million to ‘radically improve its digital operations’. This will include the introduction of an AI helper, designed to cut waiting times and freeing up staff time.

How should I handle an IHT enquiry?

If HMRC launches a formal enquiry into your Inheritance Tax return, it’s a good idea to get professional advice as soon as possible. Our Inheritance Tax team can check whether your return is accurate and, if it isn’t, advise you on how to put it right. We can also deal with HMRC on your behalf and do what we can to keep any potential penalties to a minimum. It’s even better if you talk to us before you need to submit any IHT return. Our IHT planning service can help you look ahead and use legitimate means to keep your Inheritance Tax bill to a minimum. Get in touch today to learn more.