HMRC now suspects wealthy individuals underpaid inheritance tax by as much as £392m in the year to 31 March 2026 — a 14% rise on the £344m it flagged the year before. The figure comes from TWM Solicitors’ analysis of HMRC’s own compliance data, reported this week. For an accountant, the headline number is not really the story. The story is how HMRC is finding these estates: not through random spot-checks, but through data analytics that cross-reference probate valuations against records that, in a striking number of cases, already sit in a client’s own accountancy file — business cash balances, rental and dividend income, gifts, overseas transfers, cryptoasset accounts, and the value of jewellery, watches and paintings measured against likely sale prices.
The population HMRC is targeting is not vague, either. ‘Wealthy’ means income of £200,000 or more, or assets exceeding £2m, in any one of the previous three tax years — a bracket that overlaps heavily with the retiring directors, multi-property landlords and recently-sold business owners whose personal returns and company accounts a firm like yours prepares as a matter of routine. TWM’s Duncan Mitchell-Innes named the actual failure mode: executors trying to complete an inheritance tax return without professional help are the ones most likely to misvalue an estate by accident, not by design. That is precisely the moment where a joined-up conversation — the accountant who already understands the asset picture, and a financial planner who can put lifetime gifting, trusts or IHT-specific protection in place well before probate is ever needed — turns a compliance risk that lands on a grieving family into something managed years in advance.
What TWM’s figures actually show
Duncan Mitchell-Innes, deputy head of private client and partner at TWM Solicitors, put the mechanism plainly: “The IHT rules can be complicated and, for executors trying to complete the IHT return without professional help, there is scope for misunderstanding or not being aware of the rules, leading to an inadvertent underpayment of IHT.” The figures behind that statement:
- £392m — HMRC’s suspected inheritance tax underpayment by wealthy individuals in the year to 31 March 2026.
- 14% — the increase on the £344m of suspected underpayments recorded the year before.
- £200,000 income or £2m in assets — HMRC’s own threshold for classifying a taxpayer as ‘wealthy’ for this compliance activity, applied to any of the previous three tax years.
- 23.5% — the rise in referrals to the Valuation Office Agency, from 11,845 to 14,631, in the twelve months to September 2025, used to test whether probate valuations of property and other assets hold up.
Why the compliance net has got this much finer
What has changed is not the law. It is the machinery checking compliance with it. HMRC now uses what TWM describes as increasingly sophisticated data analytics to compare probate information against other financial records it already holds or can obtain: business cash balances, rental and dividend income, gifts, overseas transfers, cryptoasset accounts, and the value of valuable possessions such as jewellery, watches and paintings. Property and asset valuations submitted at probate are also checked against subsequent sale prices and local comparables — so an estate that declared a house at one figure and sold it eighteen months later for considerably more no longer slips through unnoticed. This is systematic cross-matching, not sampling, and it is aimed squarely at the categories of asset that are hardest to value quickly and most likely to be under-declared by an executor working alone: unquoted shares, overseas property, cryptoassets, and anything without a recent, independent valuation.
The signal sitting in your existing files
None of the asset categories HMRC is now cross-checking are exotic to an accountancy practice. A retiring shareholder-director who has just taken a business off the balance sheet through a share buyback or trade sale; a couple who built a buy-to-let portfolio over two decades and have never had it independently revalued; a client with a cryptocurrency holding that has never appeared on a personal tax return because it has not yet been realised; a family business where cash has been allowed to accumulate well beyond working-capital needs — all of these sit inside a firm’s existing client base as ordinary personal tax or company clients. The accountant does not need new information to spot the risk. The accounts and returns already prepared each year contain it.
An estate rarely gets misvalued through dishonesty. It gets misvalued because nobody with the full picture was in the room when the numbers were pulled together after someone had died.
That is also where the advice gap does its quiet damage. The lang cat’s State of Advice Report 2025 found that only 9% of UK adults had paid for financial advice in the previous two years, delivered by fewer than 5,000 IFA firms, with the average new advised client bringing a £411,000 portfolio and the average IFA client aged 59. A client who has just sold a business, or who is sitting on an unvalued asset base well above HMRC’s £2m threshold, fits that average client profile almost exactly — but many of them never engage a planner at all, because their accountant relationship already feels like ‘their finances are handled’. Our earlier piece on the gifting signal covers the lifetime-transfer side of the same picture; this is the compliance side of it, and it tends to surface only after the client can no longer answer the questions HMRC is asking.
A worked example
The following is illustrative — a composite built to show how the arithmetic works, not a real client and not a prediction about any particular estate.
A retired manufacturing company director dies with an estate later valued at probate at £2.6m: a former shareholding converted to £900,000 in cash and investments after a buyback three years earlier, a rental portfolio last independently valued six years ago and declared at £850,000, a collection of watches and paintings insured for £40,000 in a schedule drawn up a decade earlier, and a cryptocurrency wallet worth £60,000 that the family only discovered after death and initially left off the return entirely. The executor, one of the deceased’s two adult children, completes the IHT400 without instructing a professional valuer for the collectibles, on the basis that the old insurance schedule looked like a reasonable starting point.
Eighteen months later the watches and paintings are sold at auction for £142,000 — more than three-and-a-half times the declared figure — and the rental properties, revalued for a subsequent sale, come in 22% above the probate figure. Both discrepancies are exactly the kind HMRC’s analytics are built to catch: a comparison of probate valuations against later sale prices, and a cross-check on assets that had gone six years without an independent valuation. The cryptocurrency wallet, discovered late, compounds the problem by looking like non-disclosure rather than oversight. None of this reflects any intent to underpay. It reflects an estate assembled, under time pressure, by an executor working from the papers available rather than from a picture anyone had reviewed while the parent was still alive.
What a genuinely joined-up conversation looks like
The accountant’s part in this stays inside existing professional judgement: noticing, from company accounts, personal tax returns or probate instructions already in hand, that a client’s estate contains assets that are hard to value, have not been valued recently, or include gifts and transfers without a proper paper trail, and saying so. That observation is compliance and tax awareness, not financial advice. What follows it — deciding how much to gift now against the seven-year rule, whether a trust makes sense for a specific asset, or whether protection should be put in place to meet a known future IHT liability without forcing a fire-sale of illiquid assets — is regulated advice, and sits with a financial planner in the same way we set out in who does what, and the line accountants should not cross.
Handled separately — the accountant notices the asset mix each year, nobody raises it with the client directly, and the family only finds out the estate was under-documented after the person has died — the compliance risk simply sits there, growing every year that valuations go unrefreshed and gifts go unrecorded. Handled together, while the client is still alive and able to make decisions about their own estate, the same observation becomes the trigger for a professional valuation, a properly dated gifting record, or cover sized to an actual liability — the difference between an executor administering a plan and an executor reconstructing one from what is left behind.
Two things worth doing this week
1. Run an asset-complexity check across clients near or above the £2m threshold. For personal tax clients with unquoted shareholdings, overseas property, cryptoassets or collectibles, check when each was last independently valued. Anything older than three years, or never valued at all, goes on a list worth raising directly.
2. Ask about gifts at the next tax return or accounts meeting. Replace the general “is your estate planning up to date?” with the specific one: “Have any gifts you’ve made in the last seven years been recorded anywhere with a date and a value?” Most clients who have made significant gifts have not written any of it down, and that gap is exactly what HMRC’s cross-checks are designed to expose.
What is still uncertain
TWM’s £392m is HMRC’s own suspected-underpayment figure, drawn from compliance activity still in progress — it is a directional measure of where HMRC believes the gap lies, not a confirmed recovery total, and the exact criteria its data-analytics tool applies have not been published. Separately, trade press this week has flagged capital gains tax and personal allowance changes as leading candidates for the coming autumn Budget, and advisers’ own pre-Budget wish lists published in the same week show continued uncertainty specifically around inheritance tax thresholds and reliefs. No Budget date or content has been confirmed at the time of writing, so any conversation with a client about gifting or trust planning should flag that the rules themselves may move, rather than presenting today’s thresholds as fixed.
Common questions
Is it an accountant's place to flag inheritance tax risk to a client while they're still alive?
Yes, to notice and say so — not to advise on the fix. An accountant who prepares a client's personal tax return or a family company's accounts already sees the things HMRC's compliance analytics look for: business interests that have never been formally valued, overseas holdings, a rental portfolio, gifts made without a paper trail. Pointing out that this asset mix would attract scrutiny at probate is an observation drawn from records you already hold, in the same way flagging a pension imbalance or a protection gap is. What follows — structuring lifetime gifts, setting up a trust, arranging cover to meet a known liability — is regulated advice and belongs with a financial planner, in the same way we set out in our note on who does what, and the line accountants should not cross.
What exactly makes HMRC treat someone as 'wealthy' for this compliance activity?
HMRC's own definition, confirmed in TWM Solicitors' analysis, is income of £200,000 or more, or assets of more than £2m, in any one of the previous three tax years. That is a wider group than the phrase 'wealthy' might suggest — it comfortably includes a retiring shareholder-director who has just sold a trading business, a couple with a buy-to-let portfolio built up over twenty years, or a professional whose bonus years pushed them over the income line without their wealth changing materially day to day. Many of these people already sit inside an accountancy firm's client base as ordinary personal tax or company clients, well before anyone thinks of them as part of an inheritance tax compliance population.
What should we actually look for in a client's own records that raises this risk?
Three things, all visible in files a firm already holds. First, hard-to-value assets — unquoted shares, overseas property, cryptoassets, or collectibles such as art, jewellery or watches — that have not had an independent, dated valuation in several years, because these are exactly the categories HMRC's analytics compare against probate figures and later sale prices. Second, gifts made in the past seven years that are not recorded anywhere with a date and value, since these directly affect the potentially exempt transfer calculation an executor has to complete. Third, business cash balances or rental income that look disconnected from a client's declared personal wealth, which is one of the specific cross-checks HMRC now runs.
Does handling a family's probate work change what we're allowed to say to them?
It sharpens the timing, not the boundary. An accountant instructed to help administer an estate can and should point out, factually, where a valuation looks thin or a gift is undocumented — that is accountancy and tax compliance work, not regulated advice, and it is the exact gap TWM's Duncan Mitchell-Innes describes when he says executors without professional help are the ones most likely to misvalue an estate by accident. What still sits outside that role is recommending how the family should have structured the estate differently, or what to do now with an inherited pension or investment portfolio. That conversation belongs with a financial planner, ideally one already familiar with the family from working alongside the accountant before the death occurred, not brought in cold once probate is under way.
Could the autumn Budget change any of this?
Possibly, and this is worth holding lightly rather than presenting as settled. Trade press coverage this week has flagged capital gains tax and personal allowance changes as live candidates for the coming Budget, and advisers' own pre-Budget wish lists published this week show continued uncertainty specifically around inheritance tax thresholds and reliefs. No date or content for the Budget has been confirmed at the time of writing. None of that changes what is visible in a client's records today, but it means any conversation about lifetime gifting or trust planning should flag that the rules themselves may move, rather than presenting today's thresholds as fixed for the years ahead.