HMRC’s intensified scrutiny of property valuations is driven by a significant rise in inheritance tax receipts and the use of advanced technology to detect discrepancies. Referrals to the Valuation Office Agency (VOA) rose by 23.5% in the past year, increasing from 11,845 to 14,631 cases.
Inheritance tax receipts for the 2025/26 financial year reached £8.5 billion, a £200 million increase from the previous year. This marks a fifth consecutive annual high for IHT receipts.
The main nil-rate band for inheritance tax has been fixed at £325,000 since 2009 and will remain frozen until at least April 2031. The 40% IHT rate applies once estates exceed this threshold.
HMRC is employing artificial intelligence and data matching technology to identify discrepancies in property valuations. This change reflects a shift towards questioning figures submitted in IHT returns rather than accepting them at face value.
Executors who fail to report property values accurately could face financial consequences, including additional tax and interest payments. Laura Walkley noted that HMRC is focusing on property valuations as a significant potential source of revenue.
In March alone, inheritance tax receipts generated £755 million, underscoring the growing importance of accurate estate planning. Yet, HMRC maintains that most individuals pay the correct amount of inheritance tax.
The increased scrutiny comes as market uncertainty affects property transactions, making accurate valuations more challenging. Officials have not confirmed how many investigations are currently underway.
This trend may lead to more rigorous audits and assessments in the future as HMRC continues to enhance its capabilities in detecting valuation discrepancies.
