An HMRC inheritance tax crackdown has seen penalties surge by a third, with grieving families forced to pay over £3 million in fines. The tax authority imposed late-filing penalties on the executors of 5,200 estates in 2024-25, totalling £3.1 million and averaging £596 each, according to data obtained under Freedom of Information rules.
Penalties Start at £100 and Rise to £3,000
Penalties for failing to submit an inheritance tax return on time begin at £100 and climb to £3,000 after one year. Rachael Griffin, of wealth manager Quilter, noted that delays in form-filling were 'inevitable' as more modest estates are caught in the net. 'As more modest estates are caught, there is a greater tendency to try and handle returns without advice,' she said.
'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,' Griffin added.
Risk of Intensifying Penalties
Griffin warned that the number of penalties could intensify from April, as pension death benefits move more squarely into the inheritance tax regime, expanding both the number of estates in scope and the complexity of administering them.
Duncan Mitchell-Innes, of law firm TWM Solicitors, highlighted the complexity of the inheritance tax form. '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,' he explained.
HMRC Response
An HMRC spokesman defended the process, stating: '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.'
