Home / Business and Economy / Thousands May Get Surprise IHT Refund
Thousands May Get Surprise IHT Refund
18 Aug
Summary
- Over 10,550 successful inheritance tax refund claims made last year.
- Property value falls can result in significant tax refunds.
- Claims must be actively made to HMRC using specific forms.
Thousands of UK families could be entitled to a surprise inheritance tax refund following a drop in property values. In the tax year 2025-26, over 10,550 successful claims for inheritance tax relief were made, more than double the previous year's figures.
This relief is available when a property's value falls between the date of death and its eventual sale. For instance, if a property valued at £1 million at the time of death is later sold for £900,000, the £100,000 decrease could lead to a £40,000 inheritance tax refund. Executors must submit a claim to HM Revenue & Customs (HMRC) using form IHT38; it is not an automatic process.
The surge in claims coincides with a weakening property market, particularly in London, where prices saw a 3.7% decrease in the 12 months to May 2026. These regions are significant as they contribute a large portion of the UK's inheritance tax revenue.
Similar relief rules apply to qualifying shares and investments sold at a loss, but these typically must be sold within 12 months of the date of death, with claims made using form IHT35. All qualifying investments sold within the period must be included in the calculation, as gains on some investments can offset potential refunds.
