More than 18,000 claims for overpaid inheritance tax made in three years

More than 18,000 claims for overpaid inheritance tax were made over the past three years, according to HMRC figures obtained by the insurance provider NFU Mutual and reported by Which? on 19 July 2025¹.

The majority of claims, 12,915, followed property sales, and the number of property claims has risen by 65% since 2022. A further 5,096 claims followed share sales where values had fallen¹.

Inheritance tax is charged on the value of an estate at the date of death, and because the bill is usually payable within six months it is often calculated on estimated values. Where property or investments later sell for less, the overpaid tax can be reclaimed from HMRC². Which? sets out three circumstances in which a refund may be available²:

Circumstance	Time limit and threshold
Property sold for less than its value at death	Within four years of death, at a price at least 5% or £1,000 lower than the death value, whichever is lower
Shares or qualifying investments sold for less than their value at death	Within 12 months of death
Property overvalued on the inheritance tax return, or its condition deteriorated before sale	Not stated

HMRC does not refund overpaid inheritance tax automatically, so a claim has to be made by someone who paid the bill or is responsible for settling it, such as an executor or trustee. Property claims use form IHT38 and claims for shares or qualifying investments use form IHT35. Refunds take between three and nine months to process, and HMRC pays interest on overpaid tax at 3.5%, calculated from the date of overpayment to the date the refund is issued².

On shares, the rules require all qualifying investments sold by the executor within 12 months of death to be included in the claim, not only those that fell in value, which can reduce the amount returned where other holdings rose².

"If some have increased in value, this will reduce the amount of inheritance tax that can be reclaimed."

Sean McCann, chartered financial planner at NFU Mutual, quoted by Which?²

Inheritance tax receipts reached £8.2bn in 2024-25¹. In May 2025, £701m was collected, taking the total for the year to date to over £1.4bn, a 7% increase on the same period a year earlier. The Office for Budget Responsibility forecast £9.1bn in receipts for 2025-26, rising to more than £14bn by the end of the decade, with around £2.5bn of that increase linked to changes announced in the Autumn Budget, mainly the decision to bring pensions into scope from April 2027¹.

Around 4% of estates currently pay inheritance tax. The Institute for Fiscal Studies predicted this could rise to over 7% by 2032-33, a forecast made before the pensions change².

Why it matters for households

The claims figures concern estates where inheritance tax was paid on an estimated value and the assets later realised less. Executors and trustees, and people who paid the tax themselves, are the ones who can claim, and the deadlines run from the date of death rather than the date of sale: four years for property and 12 months for shares and qualifying investments². A property claim requires a sale price at least 5% or £1,000 below the death value, whichever is lower².

The wider receipts figures affect estates that cross the threshold in the first place. Around 4% of estates pay the tax now, and the IFS forecast that could exceed 7% by 2032-33, before any effect from bringing pensions into scope². The £325,000 basic allowance and the £175,000 residence nil-rate band, which tapers for estates worth more than £2m, are set out in our guide to inheritance tax thresholds and rates².

What happens next

Pensions are due to come into scope for inheritance tax from April 2027, a change announced in the Autumn Budget¹. No further dates for the refund process have been reported beyond the four-year and 12-month claim windows and the three to nine months HMRC takes to process a claim².

Sources2 cited