Inheritance Tax Refunds Double
New figures obtained by NFU Mutual through a Freedom of Information request reveal a striking increase in the number of estates successfully reclaiming overpaid Inheritance Tax following the sale of property.
Successful property loss relief claims reportedly increased from 5,070 in 2024/25 to 10,550 in 2025/26.
At first sight, the message seems simple: property prices have fallen, estates have paid too much Inheritance Tax and families should remember to claim it back.
That is important. But we think there is a bigger lesson.
Inheritance Tax calculations are only as reliable as the information and valuations on which they are based.
Valuation is not a guessing exercise
For Inheritance Tax purposes, property is broadly valued at the price it might reasonably have been expected to achieve on the open market at the date of death. That is the statutory test.
That distinction matters.
If a property worth £750,000 at the date of death subsequently sells for £700,000 because the market has fallen, it does not necessarily follow that the original valuation was wrong.
Markets move. Sales take time. Properties deteriorate. Buyers renegotiate. Local demand changes.
The legislation recognises this, which is precisely why relief can be available when qualifying property is subsequently sold for less. HMRC allows loss-on-sale relief for qualifying land and buildings sold within the relevant period following death.
But equally, an estate should not begin with an unnecessarily high valuation simply because somebody believes that being “on the safe side” will keep HMRC happy.
Nor should a deliberately optimistic low value be used to reduce the tax bill.
The objective should be accuracy.
A valuation should be capable of being defended
Where an estate is potentially liable to Inheritance Tax, a property valuation can have an immediate tax consequence.
At a 40% marginal IHT rate, a £50,000 valuation difference can potentially represent £20,000 of tax before allowances, exemptions and other reliefs are considered.
That makes the quality of the valuation important.
Where property represents a material part of a taxable estate, executors should be able to demonstrate how the figure was reached. Depending upon the circumstances, that may mean obtaining an appropriate professional valuation rather than relying on an informal estimate or an aspirational estate-agent asking price.
HMRC itself makes clear that personal representatives are expected to make the fullest enquiries reasonably practicable and that obtaining a professional opinion of value may be appropriate where the market value of land or buildings cannot readily be established.
Good estate administration should therefore retain the evidence behind the figure: comparable transactions, the condition of the property, unusual title or occupancy issues and any other factors affecting its value at the relevant date.
Accuracy is not about producing the lowest number that can be defended.
It is about producing the right number that can be defended.
The subsequent sale still needs to be watched
The job does not end when the IHT return has been submitted.
If an estate property is later sold for materially less than its probate value, executors should consider whether loss-on-sale relief is available rather than simply accepting that the estate has suffered the difference.
For land and buildings, qualifying sales can generally fall within the relief where they occur within four years of death, although detailed rules apply to the calculation and to other property transactions during the period.
That means the probate valuation and the eventual sale should not be treated as two disconnected events.
There should be a clear audit trail from:
the value at death → the IHT calculation → the administration of the estate → the eventual disposal.
Where there has been a significant movement in value, somebody should be asking why.
Shares make the point even more strongly
Similar relief can apply where qualifying quoted shares or investments are sold within 12 months following death for an overall loss.
But the rules demonstrate why careful administration matters.
Where a claim is made, HMRC requires all qualifying investments sold by the relevant person during the 12-month period to be taken into account—not merely the individual shares that happened to fall in value. Relief depends upon there being an overall loss across those qualifying sales.
Executors therefore need to think before assets are sold.
The decision whether to sell, retain or transfer investments to beneficiaries can have tax consequences and should form part of the administration strategy rather than being treated simply as a mechanical exercise after probate.
The problem is going to become more important, not less
This matters particularly because the IHT landscape is widening.
From 6 April 2027, most unused pension funds and pension death benefits will also be brought within the value of a deceased person's estate for Inheritance Tax purposes. That change is now contained in Finance Act 2026.
At the same time, frozen IHT allowances and increasing asset values mean that more families are likely to find themselves dealing with estates in which relatively small valuation differences produce meaningful tax consequences.
That makes accurate estate information increasingly important.
Property, investments, pensions, lifetime gifts, trusts, liabilities and available allowances all have to be identified and valued correctly before a reliable IHT position can be established.
Our view: accuracy before tax planning
There is a temptation in Inheritance Tax planning to concentrate almost exclusively on reducing the eventual tax bill.
We think the starting point should be more fundamental.
Know what the estate is actually worth.
A good IHT review should establish the ownership, value and tax treatment of the assets before attempting to design the solution.
The same principle applies after death.
Executors should establish an accurate date-of-death position, retain the evidence supporting it and then continue monitoring significant changes during the administration period.
If a legitimate reclaim subsequently becomes available, it should of course be made.
But recovering tax that should no longer be payable is the second-best outcome.
The better outcome is an estate that was accurately valued, properly documented and carefully administered from the beginning.
The doubling of successful property-loss claims is therefore more than an interesting HMRC statistic.
It is a reminder that, when 40% tax can depend upon a valuation, accuracy is not an administrative detail. It is part of the planning itself.