HMRC spotlights your clients’ residential property valuations in IHT crackdown

The taxman is coming for your clients’ residential properties – that is, if they think the home has been undervalued for inheritance tax purposes.  

HMRC is increasingly challenging residential property valuations in IHT returns. The number of cases referred to the Valuation Office Agency (VOA) rose 23.5% in the last year, according to a Freedom of Information (FOI) request from TWM Solicitors.

Referrals to the VOA – which provides property valuations to help HMRC determine how much IHT is due – in the 12 months to 30 September 2025 jumped from 11,845 to 14,631.

TWM says the fact HMRC is increasingly bringing in the VOA to help with its scrutiny of returns reflects its increased efforts to recover revenue from underreported and misvalued estates.

Previously, lawyers would have been contacted by the VOA about a probate valuation “once or twice every few years”, TWM said. This is now happening more frequently.

Rising property prices mean residences have become a huge chunk of estates’ value. 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.

HMRC’s concern? 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.

Executors of estates – which can include financial advisers – need to take extra care so that they know exactly what HMRC requires from them when it comes to including a property valuation in an IHT return.

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.  

Executors are being advised to use a proper valuation from a RICS valuer rather than an estimate from a high street estate agent.

With financial advisers who act as executors facing increased responsibilities, you might need a bit of extra help to pick up the slack in other areas of your firm.  

That’s where our expert paraplanners come in. Chat to us today to see how we can free up your time so you can focus on hand holding your clients when they need it most.