The UK’s tax authority, His Majesty’s Revenue & Customs (HMRC), is eyeing a potential £325m underpayment in Inheritance Tax (IHT) by affluent taxpayers, as reported by UHY Hacker Young.  

This ‘tax under consideration’ for the year ending 31 March could see a rise due to impending IHT hikes from April 2026, says UHY Hacker Young. 

Concerns that IHT could lead to increased tax avoidance and evasion have also been highlighted. 

UHY Hacker Young partner Neela Chauhan noted rise in taxes is followed by an increase in tax avoidance and evasion, as individuals seek to reduce the impact of the tax hike  

The Autumn Budget, presented by Chancellor Rachel Reeve, introduced a £1m cap on agriculture and business property relief and halved tax breaks on AIM shares, which is expected to inflate IHT bills.  

Additionally, from April 2027, pension wealth transferred to beneficiaries will also come under the IHT umbrella. 

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Neela Chauhan said: “We are expecting that the number of disputes between taxpayers and HMRC over IHT will increase, partly because of an expected increase in IHT-focused tax investigations from HMRC.” 

In the tax year ending 31 March 2024, HMRC collected an additional £285m from investigations into IHT underpayment, a 14% increase compared to the £254m raised from IHT-related tax investigations the previous year. 

HMRC’s scrutiny extends to various practices, such as the deliberate undervaluation of residential properties within estates or the omission of cash and valuables from IHT forms.  

The agency is also employing new methods to identify discrepancies, including cross-referencing HM Land Registry data and using Google Street View.  

Reports suggest that HMRC may even use property contents insurance to check for valuable items not declared in IHT returns. 

This comes as HMRC’s self-assessment forms have become more complex, with a 19% increase in questions since 2009, as reported by Lubbock Fine in January 2025.  

The growing intricacy of tax returns is seen as a growing concern for taxpayers, particularly the self-employed.