Families are enduring a surge in inheritance tax (IHT) investigations as more are suspected of trying to avoid the 40 per cent charge.
The number of investigations opened by HM Revenue & Customs in the 2024-25 tax year reached a record high of nearly 4,000 — a 41 per cent increase on the previous year, when there were 2,807.
HMRC begins an investigation if it suspects IHT could have been underpaid, either through error or a deliberate attempt to undervalue the assets in a person’s estate. The taxman can use wide-ranging powers to gather evidence from various sources to understand the dead person’s financial situation.
Sean McCann from the wealth manager NFU Mutual, which used a freedom of information request to get the HMRC data, said: “This can include analysing bank statements to identify income, which may suggest the existence of undisclosed assets such as investments or property, or significant foreign currency transactions.”
IHT investigations can often take months or even years to complete. They examine gifts made in the seven years before death (those made earlier are not counted as part of the estate for inheritance tax purposes), life insurance premiums and overseas assets — areas where families often make innocent mistakes when declaring assets.
