On 5th August 2025, The Times reported that the number of investigations into Inheritance Tax by HMRC in 2024-2025 had reached a record high of nearly 4,000 – a 41% increase on the previous tax year.
This article explores what executors and other personal representatives need to know in 2025, and why professional support is often essential.
Administering an estate is a significant responsibility. For many lay executors, especially those dealing with high-value or complex estates, the process can feel daunting. With HMRC investigations into Inheritance Tax (IHT) at an all-time high — and with AI and data-matching tools now routinely used to cross-reference property, bank, and gift records — even small discrepancies can trigger scrutiny.
Frozen Allowances and Rising Complexity
The nil-rate band has been frozen at £325,000 since 2009, with married couples able to benefit from a combined allowance of £650,000.
The residence nil-rate band (£175,000) is also frozen until 2030, but it’s a complex relief that may not be available depending on the terms of the Will, estate assets, and family circumstances.
As property values and pension pots grow, more estates are falling into the IHT net.
From April 2027, most pensions will be included in estates for IHT purposes, and significant reforms to Business Property Relief (BPR) and Agricultural Property Relief (APR) are expected from April 2026 — marking the biggest shake-up in over a decade.
Common pitfalls and misconceptions
Many assume that no action is needed on the first death, or that estates under £1 million are automatically exempt. In reality, claiming allowances like the residence nil-rate band requires completing an IHT account and meeting specific conditions — often within two years of death.
Executors may also mistakenly declare an estate as “excepted” when applying for probate, without checking the detailed criteria. Trusts, lifetime gifts, foreign assets, and business interests can all complicate matters. And with HMRC charging 8% interest on unpaid tax just six months after death, early and accurate reporting is critical.
The Weight of Responsibility
Acting as an executor means taking on legal and financial duties — including potential personal liability if errors are made. Mistakes can range from failing to claim allowances to misinterpreting trust structures. Penalties vary from 0% for genuine errors to 100% for deliberate concealment, and investigations can delay estate administration for years.
Beyond tax, executors face practical risks too — such as invalidated insurance on unoccupied properties or disputes among beneficiaries. These issues are increasingly common, especially in blended families or contested estates.
Why Professional Advice Matters
It’s understandable that many executors try to manage the process themselves, hoping to save on professional fees. But when you’re one of several beneficiaries, why should you carry all the risk alone?
Professional advice is a legitimate and reasonable expense of the estate. Experienced practitioners can spot planning opportunities, ensure compliance, and help avoid costly missteps — often saving the estate more than the cost of their involvement.
Executors have a duty of care, but they’re not expected to be experts. With the right support, you can fulfil your role confidently, protect yourself from liability, and ensure the estate is administered efficiently and fairly.
Inheritance Tax investigations are increasing, allowances are tightening, and the rules are changing.
The right advice at the right time can make all the difference.
If you’re dealing with an estate — or want to make sure your own planning is in order — do get in touch with our Tax, Trusts and Succession team by clicking here.
