HMRC has issued 5,200 inheritance tax fines to bereaved families, with penalties rising by a third as the tax authority cracks down on late filings. Bereaved families have been forced to pay £3 million in fines to HMRC, with the Labour government's tax arm imposing penalties on the executors of 5,200 estates in 2024-25. The total value of these penalties reached £3.1 million, averaging £596 per case, according to data released under Freedom of Information rules.
Penalties for late inheritance tax returns
Penalties for failing to submit an inheritance tax return on time start at £100 and rise to £3,000 after one year. Rachael Griffin, of wealth manager Quilter, said delays in form-filling were 'inevitable' and added: 'As more modest estates are caught, there is a greater tendency to try and handle returns without advice. That creates predictable friction as many executors are navigating this for the first time, running up against a process that is evidence-heavy, deadline-driven and not particularly intuitive. Delays are an almost inevitable outcome, and penalties follow.'
Rising complexity for estates
Griffin warned of a clear risk that the number of penalties intensifies from April. 'Pension death benefits will move more squarely into the inheritance tax regime, expanding both the number of estates in scope and the complexity of administering them,' she said. Duncan Mitchell-Innes, of law firm TWM Solicitors, noted that the basic inheritance tax form (IHT400) has 122 questions, often requiring detailed financial and historical information. In many cases, this must be supplemented by additional schedules – of which there are more than 30 – depending on the nature of the estate.
HMRC response and reforms
An HMRC spokesman said: 'The reality is we reduced reporting requirements during this period for most non-taxpaying estates. We're constantly looking at ways to simplify returns, and the Government is investing £52 million to simplify and digitalise our inheritance tax service to make the process quicker and easier.' The crackdown comes as more families are caught in the inheritance tax net, with experts urging executors to seek professional advice to avoid costly penalties.
