HM Revenue & Customs recovered £246m in underpaid inheritance tax last year following an increase in enforcement activity.

Investigations into inheritance tax rose to 3,977 in the financial year to April 2025, up from 3,793 the previous year, according to data from TWM Solicitors.

The firm said HMRC is using data-matching tools, including AI systems, alongside information from the Land Registry, the Trust Registration Service and mapping data to identify discrepancies in returns.

The measures are aimed at increasing revenue from underreported and misvalued estates.

TWM Solicitors said the sharp rise in inheritance tax receipts – up more than 61% to £8.3bn since 2020 – has increased HMRC’s focus on potential underpayment and non-compliance.

David Lunn, partner in the private client team at TWM Solicitors, said: “HMRC’s investigations are becoming increasingly complex, particularly when it comes to residential property.

“With tax rules growing ever more complicated, and the IHT net widening with each Budget, people need to ensure they obtain proper advice. Penalties can run into tens of thousands of pounds.”

Increasing property and asset values, alongside frozen tax thresholds, have pushed more estates into the inheritance tax net and increased the scope for underpayment.

The inheritance tax nil-rate band has remained at £325,000 since April 2009. Before then, the threshold increased almost every year from 1986 to 2009, with only two exceptions. No increases are currently planned.

Lunn added: “The IHT threshold was originally set so that only families with significant assets would pay the tax. But after years of being frozen, even families with a relatively modest home are now finding they owe IHT.”

An HMRC spokesperson said: “The majority of people pay the correct amount of inheritance tax. In cases where it is suspected someone has not, investigations can be opened to address issues and ensure the system remains fair.”