HMRC is increasingly challenging residential property valuations in inheritance tax (IHT) returns, with the number of cases referred to the Valuation Office Agency (VOA) rising 23.5% in the last year, according to research from TWM Solicitors, a private wealth and family law firm.
The VOA provides property valuations to help HMRC determine how much IHT is due. TWM’s study showed that referrals to the VOA in the 12 months to 30 September 2025 had risen from 11,845 to 14,631.
The law firm say that this increase reflects more intense efforts by HMRC to recover revenue from underreported and misvalued estates, saying that previously lawyers would have been contacted by the VOA about a probate valuation “once or twice every few years”, It says this is now happening more frequently.
According to HMRC figures, residential property accounted for 46.8% or £29.5bn of the net value of estates in the 2022/23 tax year.
Sharp increases in tax burdens can lead to a rise in attempted tax evasion and avoidance. As IHT receipts have risen by more than 61% to £8.3bn since 2020, HMRC is likely to be increasing scrutiny of returns to ensure the correct amount of tax is paid.
Rising house and asset prices and frozen tax thresholds have resulted in more people having to pay IHT. Since April 2009, the IHT nil-rate band has been frozen at £325,000.
Laura Walkley, head of private client at TWM, said: “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.”
Ensuring compliance
She advised estate executors to take expert advice to ensure they know exactly what HMRC requires from them when it comes to including a property valuation in an IHT return and to ensure they remain compliant.
“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. You are advised to use a proper valuation from a RICS valuer rather than an estimate from a high street estate agent,” she said.
The number of IHT investigations being carried out by HMRC is rising. 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, said TWM.
