HMRC's property valuation crackdown has executors in its sights

HMRC is taking a keener interest in residential property valuations on inheritance tax returns. If a figure looks light, the taxman is increasingly likely to ask questions.

A cheerful estate-agent estimate may feel wonderfully convenient. HMRC appears less committed to the mood.

The number of cases referred to the Valuation Office Agency (VOA) rose by 23.5 per cent in the year to 30 September 2025, according to a Freedom of Information request by TWM Solicitors.

There were 14,631 referrals during those 12 months, up from 11,845 a year earlier. The VOA provides property valuations that help HMRC decide whether the correct amount of inheritance tax has been paid.

TWM believes the rise reflects HMRC’s growing efforts to recover tax from estates where assets may have been underreported or incorrectly valued.

The shift is noticeable. TWM said lawyers might previously have heard from the VOA about a probate valuation “once or twice every few years”. Such contact is now becoming more frequent.

It’s not difficult to see why residential property is attracting attention. HMRC figures show that it accounted for 46.8 per cent, or £29.5 billion, of the net value of estates in the 2022/23 tax year.

The message for executors is dull but valuable: evidence beats optimism, particularly when HMRC is doing the checking.

Inheritance tax receipts have also risen by more than 61 per cent since 2020, reaching £8.3 billion. TWM suggests that sharp increases in the tax burden can encourage more attempted avoidance and evasion, giving HMRC another reason to scrutinise returns carefully.

For executors, including financial advisers who take on the role, this is more than an interesting set of figures.

A valuation that doesn’t stand up to examination could leave the estate facing additional tax and interest. Depending on the circumstances, the executor could also be held personally responsible. Being helpful comes with rather more baggage when your name is attached to the paperwork.

Executors are therefore being advised to obtain a formal valuation from a Royal Institution of Chartered Surveyors valuer rather than relying on an estimate from a high-street estate agent. That may cost more at the outset, but defending a hopeful valuation to HMRC is unlikely to be the cheaper or more relaxing option.

Advisers acting as executors should also make sure they understand exactly what HMRC requires, retain evidence supporting the figure used and record how the valuation was reached. With referrals climbing, assuming a reasonable-looking estimate will pass without comment is becoming a riskier bet.

Taking on executor duties can consume time that would otherwise go towards running the firm and looking after clients. If the rest of the workload starts backing up, our paraplanners can step in and keep cases moving.

HMRC can deal with the bricks and mortar. We’ll help you stop the paperwork becoming another part of the estate.

A hopeful property figure can save tax briefly. Defending it may occupy everybody for rather longer.