HMRC targets property valuations in IHT returns

HM Revenue & Customs is apparently stepping up scrutiny of residential property valuations in inheritance tax returns, with referrals to the Valuation Office Agency (VOA) rising 23.5% over the past year.

That’s according to research from TWM Solicitors which says that referrals to the VOA climbed from 11,845 to 14,631 in the 12 months to 30 September 2025.

The VOA provides independent valuations used by HMRC when calculating inheritance tax liabilities.

For estates where property forms a large share of the total, this brings more cases into closer review with HMRC turning to VOA input more often when submitted figures are questioned.

HMRC targets property valuations

The firm’s head of private client, Laura Walkley, 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.”

She added: “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.”

More VOA valuation contact

TWM said the increase points to a change in how valuations are handled and rather than being taken at face value, they are being frequently challenged.

Lawyers who once expected contact from the VOA only occasionally are now seeing it far more often.

Residential property accounted for 46.8% of the net value of estates in the 2022/23 tax year, or £29.5bn.

That weighting places property at the centre of many inheritance tax calculations.

IHT tax receipts

Inheritance tax receipts have risen by more than 61% to £8.3bn since 2020.

Meanwhile, the nil-rate band has stayed fixed at £325,000 since April 2009, drawing more estates into liability as values increase.

Alongside the rise in referrals, HMRC is expanding its use of data matching and artificial intelligence tools to flag inconsistencies in inheritance tax returns.

This is also a way to prompt further enquiries, and the law firm says that estate executors should take legal advice.