It is known that Inheritance Tax (IHT) enquiries have jumped thanks to a freedom of information request by Price Bailey. HMRC data shows 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, the Chancellor has limited options for increasing government income through taxation. It’s therefore unsurprising that HMRC is attempting to raise more from IHT. The tightening of business property and agricultural property reliefs and the increased importance of realistic valuations means more monitoring work will be required.
Are IHT enquiries effective?
Interestingly, although the number of Inheritance Tax enquiries has spiked, the proportion that resulted in amendments to IHT returns has actually 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 (or 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 IHT is diminishing.
Paper returns
Part of the problem HMRC has when instigating IHT enquiries is the fact that the system is still largely paper based. Given the recent changes to IHT relief for farmers and businesses and the IHT threshold remaining frozen, it’s almost certain that the number of IHT returns HMRC processes will increase.
That said, it’s inevitable in the longer term that the system will move online over the coming years. HMRC has recently been awarded £500 million to ‘radically improve its digital operations’. A case of watch this space!
Stephen Parnham
