HMRC Inheritance Tax Investigations: What Bereaved Families Need to Know

Can HMRC investigate my loved one's estate after they die?

1HMRC opened 3,636 inheritance tax investigations in just nine months of 2025/26 — a 33% increase over three years
2Since April 2022, more than 14,000 families have been investigated, with HMRC recovering £246 million
3Common triggers include undervaluing property, gifts made in the 7 years before death, and missing accounts
4If investigated, HMRC can go back years and charge interest and penalties on top of any unpaid tax
5You don't need to face this alone — getting professional advice early can prevent a much larger bill later

Yes — HMRC can and does investigate estates after a death. The scale has grown significantly: HMRC opened 3,636 IHT investigations in just nine months of 2025/26, a 33% increase over three years. Since April 2022, more than 14,000 families have faced investigations, and HMRC has recovered £246 million as a result. IHT receipts hit £7.1 billion in the first 10 months of 2025/26. Understanding what triggers an investigation — and how to protect yourself — is one of the most important things an executor can do.

What is an HMRC inheritance tax investigation?

An HMRC IHT investigation is a formal challenge to the estate return filed by the executor. When you apply for probate on a taxable estate, you complete an IHT400 form declaring all assets, gifts and liabilities. HMRC reviews these returns and, where it suspects the declared value is incorrect, opens an investigation.

Investigations range from simple queries (HMRC asking for supporting evidence for a valuation) to full compliance checks where HMRC examines years of financial records. In serious cases, HMRC can appoint its own independent valuer and challenge the estate in the Tax Tribunal.

Executors are personally responsible for the accuracy of the IHT400. If HMRC finds errors or omissions, the estate — and potentially the executor personally — can be liable for the unpaid tax, interest, and penalties.

How likely is it that my loved one's estate will be investigated?

Most estates are not investigated. HMRC uses a risk-based approach, focusing resources on cases where the declared value seems low relative to the deceased's known lifestyle, profession or assets. That said, the number of investigations has increased significantly — 3,636 in just nine months of 2025/26, up 33% over three years.

Higher-risk estates include those where:

Property was valued significantly below market rate
The estate value is close to but just under the IHT threshold (HMRC is alert to this pattern)
The deceased had business interests, overseas assets, or trusts
Gifts made in the 7 years before death were not fully declared
The estate is large and involves complex assets

IHT receipts reached £7.1 billion in the first 10 months of 2025/26 — a record level driven by frozen thresholds and rising asset values. More estates are now subject to IHT than ever before, which means more returns for HMRC to scrutinise.

What triggers an HMRC IHT investigation?

The most common triggers, based on HMRC's published guidance and professional adviser experience, are:

Trigger	Why HMRC investigates
Undervalued property (most common)	HMRC has access to Land Registry data and comparable sales. A valuation significantly below neighbouring properties raises an immediate flag.
Undisclosed gifts in the 7 years before death	Gifts that were potentially exempt transfers must be declared. Bank records often reveal payments not included in the IHT400.
Missing bank accounts	HMRC can cross-reference the estate with HMRC tax records and bank interest data. Undisclosed accounts are a common finding.
Trusts or business interests not declared	Business property relief and trust interests must be accurately reported. Omissions or overclaimed reliefs are frequently challenged.
Overseas assets not included	UK-domiciled individuals are taxed on worldwide assets. HMRC uses international information-sharing agreements to identify undisclosed foreign accounts and property.

What happens if HMRC investigates your loved one's estate?

The process typically begins with a formal letter from HMRC to the executor, explaining what they are querying and what evidence they want to see. This might be:

A professional RICS valuation of the property
Bank statements covering the last 7 years
Evidence of gifts and who received them
Business accounts or share valuations
Details of any trusts the deceased was a beneficiary of

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At this stage, you should respond promptly and comprehensively. Ignoring HMRC's letters makes things significantly worse.

If HMRC concludes that more IHT is owed, you will receive a formal assessment. Interest runs from the date the IHT was originally due (usually 6 months after the month of death), so delay is costly. Penalties are charged on top:

0% penalty for honest mistakes with no carelessness
Up to 30% for careless errors
Up to 70% for deliberate understatement
Up to 100% for deliberate understatement with concealment

These percentages are applied to the amount of unpaid tax — so on a large estate, penalties can add up to tens of thousands of pounds.

How to protect yourself as an executor

The best protection is accuracy from the outset. These steps reduce the risk of an investigation significantly:

Commission a professional property valuation.Use a RICS-registered surveyor for any property in the estate. An estate agent's estimate is not sufficient for IHT purposes and is routinely challenged by HMRC.
Disclose all gifts, including small ones.Review the deceased's bank statements for the 7 years before death. Payments to family members, even modest ones, should be declared and the basis assessed (annual exemption, regular gifts from income, etc.).
Check for all accounts. Use the dormant accounts tracing service to identify accounts you may not know about. NS&I and Premium Bonds can also be traced through NS&I's free service.
Use a solicitor for complex estates. If the estate includes business assets, overseas property, trusts or significant investments, professional help is strongly advisable. The cost of getting it right is far less than the cost of HMRC finding errors.
Keep all records for at least 7 years. HMRC can request records relating to the estate many years after the grant is issued. Retain all valuations, correspondence, and estate accounts.

The 7-year rule on gifts — explained in plain English

Gifts made within 7 years of death are generally included in the taxable estate. The rules work as follows:

Gifts made more than 7 years before death: outside the estate, no IHT
Gifts made within 3 years of death: fully chargeable (unless within an annual exemption)
Gifts made 3–7 years before death: subject to "taper relief" — the amount included in the estate reduces on a sliding scale

This is why executors must look back 7 years, not just at what the deceased owned at the date of death. For a full explanation, see our guide to the 7-year gifting rule.

What to do if HMRC contacts you about the estate

If HMRC writes to you about the estate, the most important things are:

Don't ignore it. A failure to respond makes HMRC assume the worst and can lead to higher penalties.
Respond promptly. HMRC sets deadlines in its letters. If you need more time, write to ask for an extension — they usually grant one if asked in advance.
Seek professional advice. A solicitor or chartered tax adviser experienced in IHT can liaise with HMRC on your behalf, gather the right evidence, and negotiate the outcome. This often results in a significantly smaller final bill.
Don't amend the IHT400 without advice. Once HMRC has opened a formal investigation, any changes to the return should be handled by a professional.

For general context on IHT and how it works, see our UK inheritance tax guide 2026/27 and the IHT400 form completion guide. Farra helps you organise every step of the estate administration process — get started here.