Inheritance tax warning: HMRC's 'snooper computer' catching out grieving Britons

Britons have been warned HMRC's "snooper computer" is leading to an increasing number of bereaved families being investigated for underpaying inheritance tax.

Research shows more than 4,000 bereaved families were investigated by HM Revenue & Customs last year over suspicions of underpaid death duties.

The taxman handed out a £326million bill for inheritance tax payment errors in 2021-22 — up 28 per cent on the previous tax year.

Georgie Frost from the 'This is Money' Podcast told GB News: "One of the things that is catching [people] out is other assets.

"So what do you mean by assets when you leave it over this figure of 325,000? Well, of course it's property, its anything like investments, money, but also possessions.

"That can include granny's ring, an expensive painting, a vintage car, anything that's worth some money, and more and more people are being caught out by this.

"And I think one of the reasons is HMRC invested very heavily in an affectionately termed 'snooper computer' about a decade ago.

"So they're much, much better at catching people out."

The personal finance expert described the 40 percent tax rate as "a huge whack".

The amount is charged on all assets in the estate of someone who has died, over a £325,000 threshold.

An additional allowance of £175,000 is available if the home of the person who has died is left to direct descendants.

Frost added: "There's a sense of unfairness. 'I've worked really hard all my life, why should I have to give?'"