HMRC Issues More Penalties for Late IHT Returns: How To Avoid Them
Published / Last Updated on 08/06/2026
Overview
HMRC has reported a 35% increase in late‑filing penalties for inheritance tax (IHT) returns over the past five years. More than 5,000 families received penalties in the latest year alone, highlighting how complex and time‑sensitive the IHT process has become.
For many executors, what appears to be a straightforward administrative task quickly becomes a technical, evidence‑heavy exercise — and delays can be costly.
This guide explains why penalties are rising, what executors need to know, and how to avoid common pitfalls.
Why Late‑Filing Penalties Are Increasing
1. More estates now fall into the IHT system
- The nil‑rate band has been frozen since 2009.
- Rising property values mean more families must complete IHT returns, even when no tax is due.
2. Executors underestimate the complexity
- The main IHT400 form contains 122 questions.
- HMRC may require 30+ supplementary schedules depending on the estate.
3. More families are filing without professional advice
DIY filings often lead to:
- Missing information
- Incorrect valuations
- Unclaimed reliefs
- Delays that trigger penalties
4. Asset tracing takes longer than expected
Executors must identify:
- All bank accounts
- Investments and savings
- Lifetime gifts (sometimes going back years)
- Pensions and insurance policies
Financial institutions can take weeks to respond.
5. Reliefs and exemptions must be actively claimed
HMRC does not apply reliefs automatically.
Executors must provide evidence for:
- Gifts out of surplus income
- Charity exemptions
- Business or agricultural relief
- Residence nil‑rate band
Missing or incomplete evidence can delay the return.
What Are the Penalties for Late Filing?
HMRC charges:
- £100 if the return is late
- + £100 after 6 months
- Up to £3,000 if more than 12 months late
Penalties apply even if no IHT is payable.
Upcoming Change: April 2027 Pension Reform
From April 2027, unused pension pots are expected to become subject to IHT.
This could:
- Increase the number of estates requiring full IHT returns
- Add further complexity
- Increase the risk of late‑filing penalties
How Executors Can Avoid Penalties
Start early
Begin gathering information immediately after death — you don’t need to wait for probate.
Get professional support
Specialist advice helps with:
- Correct valuations
- Identifying all assets
- Claiming reliefs
- Completing the IHT400 accurately
- Avoiding penalties and unnecessary tax
Keep clear records
HMRC may request evidence for valuations, gifts, or relief claims.
Good documentation speeds up the process and reduces enquiries.
Key Takeaway
The rise in penalties reflects a broader trend: IHT compliance is now too complex for most executors to manage alone without risk.
Professional guidance can reduce stress, prevent delays, and ensure families do not pay more tax — or penalties — than necessary.