Falling house prices push up IHT refunds
More than 10,500 estates reclaimed overpaid inheritance tax on property sales in 2025-26 as falling house prices pushed up refunds, according to figures from HMRC.
The number of families reclaiming inheritance tax because they sold inherited property for less than its probate value more than doubled last year.
Figures obtained by NFU Mutual through a Freedom of Information request showed that successful inheritance tax refund claims relating to property rose from 5,070 in 2024-25 to 10,550 in 2025-26, the highest level on record.
If executors sell inherited assets such as property for less than the probate valuation, they may be entitled to reclaim some of the tax paid.
The refund is not automatic and must be claimed from HMRC. Property must generally be sold within four years of death to qualify, while shares and other qualifying investments must be sold within 12 months.
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London and South East account for nearly half of inheritance receipts
The increase in property-related claims comes amid a weakening housing market, particularly in London and the South East, where families are more likely to face inheritance tax bills.
Rightmove’s most recent house price index showed the average house price continues to fall amid geopolitical uncertainty and significantly high numbers of properties selling below asking price.
London and the South East accounted for a disproportionate share of inheritance tax receipts. HMRC data shows estates in London and the South East paid £3.26bn in inheritance tax in 2023-24, representing 46% of the £7.03bn collected across the UK.
Sean McCann, chartered financial planner at NFU Mutual, said: “A large inheritance tax bill can be a nasty shock for grieving families. These figures show that more people are waking up to the possibility that they could reclaim overpaid inheritance tax.
“While the fall in property prices in London will have contributed to the increase in reclaims, in many cases it will be the result of property having been overvalued on the inheritance tax return or because of deterioration of the property between the death and subsequent sale.”
