HMRC’s intensified scrutiny of property valuations is reshaping the landscape of inheritance tax compliance. Why this sudden focus? The answer lies in a staggering rise in inheritance tax receipts, alongside the deployment of advanced technologies like artificial intelligence to detect discrepancies.
In the past year, referrals to the Valuation Office Agency (VOA) surged by 23.5%, jumping from 11,845 to 14,631 cases. This increase signals a clear strategy: HMRC is honing in on potential revenue sources.
Inheritance tax receipts hit a record £8.5 billion for the 2025/26 financial year — an increase of £200 million from the previous year. With the nil-rate band for inheritance tax fixed at £325,000 since 2009 and frozen until at least April 2031, more estates are falling into taxable territory.
The stakes are high. Executors who misreport property values may face financial repercussions, including additional taxes and interest payments. Laura Walkley, an expert in estate planning, notes that “if an executor fails to report a property value properly, there can be financial consequences for the estate such as additional tax and interest to pay potentially by the executor personally.”
This scrutiny comes amidst market uncertainty affecting property transactions, making accurate valuations increasingly challenging. Yet HMRC’s approach reflects a noticeable shift — they are questioning reported figures rather than accepting them at face value.
As Walkley emphasizes, “There has been a noticeable shift towards questioning figures submitted in IHT returns.” This change indicates that HMRC is not just passively accepting declarations but actively seeking discrepancies through data matching technology.
The broader implications are clear: individuals engaged in estate planning must now be more vigilant than ever. The majority pay the correct amount of inheritance tax; however, where discrepancies arise, investigations can be opened.
Still, uncertainties linger. Officials have not confirmed whether this increased scrutiny will continue at the same pace or if it will evolve further as technology advances. The future remains unpredictable.