Data released this week reveals that referrals to the VOA for inheritance tax cases surged from 11,845 to 14,631 in the year ending September 30, 2025, a notable increase of 23.5 percent. This uptick reflects HMRC's focus on ensuring that estates, especially those with substantial residential property holdings, are valued correctly for tax purposes. For landlords, who often hold significant wealth in their rental properties, this scrutiny is particularly critical. The latest figures indicate that residential property accounted for nearly 47 percent of the net value of estates in 2022-23, amounting to £29.5 billion.

As property values continue to rise, more estates are inevitably drawn into the inheritance tax net, particularly in the context of frozen tax thresholds. The nil-rate band has been stagnant at £325,000 since 2009, meaning that even modest gains in property values can push estates into liability. As a result, landlords and property owners need to reassess their estate planning strategies to ensure compliance with evolving regulations and scrutiny from HMRC.

Navigating valuation challenges

For landlords with older, mortgage-light portfolios, the implications of this heightened scrutiny are manifold. A property that has been held for several years may seem straightforward from a valuation perspective, but various factors can influence its probate value. Condition, tenancy status, and comparable sales data are all critical elements that HMRC may scrutinise when assessing an estate.

Landlords must now recognise that informal estimates may not be defensible against HMRC's rigorous checks. A formal valuation conducted by a Royal Institution of Chartered Surveyors (RICS) accredited professional may incur higher upfront costs but could ultimately save landlords from the complications and costs associated with disputes. Ensuring that valuations are well-documented and supported by robust evidence will be increasingly important.

Increasing tax burden on property-rich estates

The recent rise in inheritance tax receipts, reaching £8.5 billion, underscores the financial pressures facing landlords with property-heavy estates. HMRC's intensified focus on verifying property valuations signals that landlords should be more proactive in how they approach this aspect of estate management. With frozen thresholds and rising property values, the risk of facing inheritance tax is not just about the amount owed; it also encompasses the defensibility of the valuation itself.

Landlords must be aware that the burden of inheritance tax could increase as HMRC continues to tighten its approach. Research indicates that estates predominantly composed of residential properties will face greater scrutiny as the government seeks to bolster tax revenues. This shift highlights the need for clear record-keeping, including detailed information on tenancy agreements, property condition, and comparable market evidence.

Best practices for estate planning

For landlords, the revised landscape necessitates a thorough review of estate planning strategies. This includes evaluating whether current property valuations are defensible under heightened scrutiny from HMRC. Executors of estates likely to inherit rental properties should leave comprehensive records that outline the status and conditions of these assets.

Moreover, engaging qualified professionals for property valuations can provide landlords with a solid defence against potential challenges from HMRC. Given the complexities surrounding valuation disputes, seeking expert advice early in the probate process is advisable. This proactive approach can alleviate stress and reduce the likelihood of costly delays if HMRC chooses to contest the valuation.

Adapting to an evolving regulatory environment

As the landscape for inheritance tax continues to evolve, landlords must remain vigilant. The combination of frozen thresholds and aggressive HMRC scrutiny necessitates a fundamental shift in how property valuations are conducted and presented during probate. While the challenges may seem daunting, embracing a thorough and systematic approach to estate planning can mitigate risks and ensure compliance with regulatory changes.