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The taxman is increasingly investigating the property valuations reported on inheritance tax (IHT) returns.
It comes as the latest IHT figures reveal that families paid a record £8.5 billion between April 2025 and March 2026.
As more families get caught out by death duties, we explain what you need to know to ensure your IHT return is watertight.
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The number of IHT returns referred to the Valuation Office Agency (VOA) increased by 23.5% last year, according to a Freedom of Information request by TWM Solicitors. The VOA is the official body that provides valuations and property advice to the government and local authorities. In the year to 30 September 2025, referrals increased from 11,845 to 14,631.
This comes as the amount of IHT paid by families hit a record level, for the fifth consecutive year. In the last 12 months families paid £8.5 billion, up £200 million over the course of a year, and up from £3.5 billion 20 years ago.
Susannah Streeter, chief investment strategist at The Wealth Club, says: “HMRC’s tougher enforcement is adding further pressure at what is already a difficult time for bereaved families.”
TWM said that in the past that solicitors would only have been contacted by the VOA once or twice every few years.
Property accounted for nearly half of the net value of estates (46.8%) in 2022/3, according to HMRC, and the firm of solicitors said that as tax burdens increase, there may be an increase in avoidance and evasion as a result.
Laura Walkley, head of private client at TWM, says: “HMRC is clearly focusing on property valuations as a significant potential source of revenue. There has been a noticeable shift towards questioning figures submitted in IHT returns, rather than accepting them at face value.”
If HMRC discovers that a property valuation is too low, the result could be a surprise tax bill.
She warns: “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.”
The Valuation Office Agency, which provided property valuations to the government, was previously an executive agency. It was integrated with HMRC on 1 April 2026.
It’s the executor or personal representative’s duty to include a realistic valuation for a property, if it’s not been sold.
You should not rely on an ‘informal’ valuation from an estate agent.
Laura Colville, senior associate solicitor at law firm, Irwin Mitchell, says: “The safest approach is for executors to obtain a valuation from a RICS‑qualified chartered surveyor. In practice, a professional valuation should always be considered but will be particularly useful for higher value properties, or where estate values could potentially exceed the inheritance tax allowances available.”
Although Colville says a professional valuation will involve some additional cost, it could spare your executor and your family, stress, delays and additional tax, further down the line.
She adds: “We see far fewer HMRC queries where a professional surveyor’s valuation has been provided, compared with situations where an estimated figure or an estate agent’s opinion is used.”
There will naturally be some cases where the valuation ends up being too high. The property may be slow to sell and not achieve its asking price.
But this shouldn’t be a reason to undervalue a property, says Bernard Rust, chartered financial planner at Shackleton Advisers: “The general valuation principle is that property should be valued at its fair market value. The fact that a property may not have sold (yet) does not in any way alter that principle.”
He adds: “In the event a property is sold for less than the stated valuation, it’s possible to reclaim overpaid tax from HMRC.” You can make a loss-on-sale relief claim if that happens.
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HMRC can challenge property valuations for IHT within 4 years of the last payment, but this can be extended to 6 years if it thinks there has been carelessness, or even up to 20 years if there is deliberate underestimation.
The same time limits apply to IHT investigations for any other reasons.
It’s not just property valuations that are coming under scrutiny from HMRC. More generally, investigations into underpaid IHT are on the increase.
Streeter at The Wealth Club says: “More than 14,000 bereaved families have been investigated for potentially underpaid inheritance tax since 2022–23, with case volumes running ahead of last year. These enquiries, often triggered by data matching and valuation checks, can last months or even years and may result in additional tax, interest and penalties.”
Another ‘red flag’ could include gifts that breach HMRC rules, such as gifts with reservation of benefit, where donors continue to benefit from something they have given away, such as the family home.
Meanwhile, Colville says, that in her firm’s experience, returning a form with a nil or low value for personal belongings can raise questions, especially if the estate is substantial.
“HMRC understands that everyday household items have modest resale value, but most estates contain something of worth, such as jewellery, watches, collections, vehicles or antiques. As a general guide, where individual items may be worth more than around £1,500 - £3,000, or where the total value of personal chattels is likely to exceed £10,000 - £15,000, a professional valuation should be considered.”
She adds: “Aside from increased requests for help from the VOA, HMRC’s use of AI, data matching and other advanced big data tools, is also increasing its ability to identify inconsistencies and errors in IHT returns, leading to more frequent queries.”
Completing an IHT return is a big responsibility for executors and one that is only going to increase once unspent pensions become subject to IHT from April 2027.
But it’s important not to cut corners, warns Colville. “As a result of recent reforms, more individuals are going to be brought within the scope of inheritance tax, which places additional pressure on valuation resources and is likely to result in delays. In that environment, there may be a temptation to rely on informal estimates more frequently, but doing so carries risk.”
She adds: “Unsupported valuations are more likely to attract HMRC challenge, potentially leading to interest, penalties and, in some cases, personal liability for personal representatives.”
Rust agrees and says it’s “incumbent on personal representatives to make full and exhaustive enquiries to ensure proper valuations of all assets.”
He adds: “If estimates are used, it’s vital to disclose these as such. Similarly, anyone dealing with an estate should ensure that any gifts made in the seven years prior to death are properly and accurately disclosed.”
If you’re still IHT planning and will-writing yourself, it’s also important that you choose the right executor and ensure that they understand what the job entails.
Whether you’re completing an IHT return as an executor, or you’re deciding who should fulfil the role when you die, bear in mind a solicitor's input can be helpful in ensuring the paperwork includes all the details HMRC will need.
Saga Legal has partnered with Co-op Legal Services, who provide regulated legal services, helping to ensure you have the right level of support and protection for yourself and your family. They can give advice on topics including how a will could reduce the impact of any potential inheritance tax, and why a trust will might better protect your home and savings. You can book a free legal review to get the guidance you need. After your free review, if you choose a product or service, they’ll explain any fees and costs to you clearly.
You can only use the free legal review service if you live in England and Wales. If you’re in Scotland or Northern Ireland, you can get estate planning help from Co-op Legal Service’s trusted partners.
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Worried about inheritance tax? By putting in place the right will for your needs, you can protect your home, assets and savings.
You can book a FREE legal review, to get the guidance you need on IHT in relation to your will. T&Cs apply.
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