Bereaved families are facing a surge in penalties from the taxman for missing inheritance tax (IHT) deadlines, with fines climbing sharply over the past half-decade.
Freedom of Information (FoI) data reveals that HM Revenue and Customs (HMRC) imposed late-filing charges on the executors of 5,200 estates during 2024-25, extracting £3.1million in penalties.
This marks a 35 per cent jump compared with 2020-21, when 3,850 families were penalised to the tune of £1.8million.
Those responsible for administering an estate must submit the IHT400 form to HMRC within a year of the death occurring.
Inheritance tax raid continues as HMRC hits grieving families with £3.1million in penalties
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GETTYDuncan Mitchell-Innes, of law firm TWM Solicitors, said: “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.”
Late submissions attract charges starting at £100, escalating to £3,000 after twelve months.
Wealth managers are cautioning that penalty numbers could climb further once pension death benefits fall within the inheritance tax net from April.
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Rachael Griffin, a tax and financial planning wealth manager at Quilter, said delays in form-filling were “inevitable” because of the complexity of the process.
She 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.”
Ms Griffin warned there is “a clear risk” that fines will intensify from April as pensions expand both the number of estates affected and administrative complexity.
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HMRC has rejected suggestions that penalties will become more widespread next year, with a spokesman stating it is “simply not true” that fines will increase.
The 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 £52million to simplify and digitalise our inheritance tax service to make the process quicker and easier.”
Meanwhile, frozen tax-free thresholds since 2009 have pulled growing numbers of families into the inheritance tax system, which applies at 40 per cent on estates exceeding £325,000.