By Tim Collyer, Chartered Financial Planner at Montgomery Charles
In May this year, a report from the National Audit Office stated that levels of “non-compliance” from high earners could be targeted by the government in its efforts to shore up a significant black hole in the UK’s public finances.
The report’s conclusions couldn’t be clearer: “HMRC is now aiming to enable more prosecutions of individuals, including the wealthy, for evading taxes”.
It’s just the latest development in a trend we’ve noticed for some time – HMRC investigations are becoming more frequent, more targeted, and are happening with less warning. In this article, we take a look at the key pitfalls to watch out for – and the action you can take to protect and grow your finances.
Tax is creeping in everywhere
There’s an old saying: “It’s not what you know, it’s what you don’t know that costs you”. That’s rarely been truer than in today’s tax landscape. And right now, inheritance tax (IHT) is topping the headlines – with investigations reportedly up by nearly 40% in just a year.
According to The Times, HMRC opened over 4,100 inheritance tax investigations in 2024-25, up from 3,028 the year before. That’s a sharp spike – and it’s not random. With frozen thresholds, rising property prices, and families sitting on more wealth than they realise, the taxman’s job is getting easier.
The result? More estates being challenged. More people facing big bills. And often, families only discover the problem months – if not years – after the fact, with penalties and interest quietly mounting in the background.
Paper notifications are disappearing
HMRC is slashing the number of letters it sends, part of a wider move to go “digital-first”. The aim? To save £50 million by cutting 75% of outgoing post by 2028. But this creates a huge blind spot – especially for pensioners or those less comfortable online.
If you’re not checking a digital account you didn’t know existed, how would you ever know you owed tax? Or missed a deadline? You wouldn’t. Not until the penalties land, often years later, with interest ticking away like a hidden metronome.
To make matters worse: when HMRC deems that the fault lies with you – even if it’s just a case of being offline – the burden, both financial and emotional, is yours to carry.
Where else are we seeing an HMRC crackdown on high earners?
Fiscal drag is becoming one of the most punishing tax features of modern life – especially for pensioners. Here’s how it works: the government freezes tax thresholds, but incomes – thanks to inflation, investment growth, and things like the pension triple lock – keep rising. So gradually, you slip into higher tax brackets without actually getting ‘richer’. More people are now paying higher-rate tax without changing a thing about their finances.
Many clients are unaware just how exposed their General Investment Accounts (GIAs) have become. These used to be a middle ground – a flexible way to invest outside ISAs, with decent allowances to shield returns from tax. But those allowances have been chipped away. The CGT exemption? Halved. Dividend tax-free thresholds? Slashed. And with interest rates still relatively high, even basic savers may now find they owe tax on their cash.
We are also now seeing a shrinking personal savings allowance, slashed dividend allowance, and reduced capital gains exemptions.
What can I do about all this?
Well, quite a lot. You could review your estate planning, monitor allowances, manage asset disposals, rebalance portfolios, and ensure you’ve registered for digital notices with HMRC. You could also optimise your ISA and pension mix to shelter returns from tax, and plan withdrawals to avoid being dragged into higher brackets.
But let’s be honest – this isn’t something you can sort out with a notepad and a cup of tea on a lazy Sunday. The rules don’t just change; they shift under your feet. If your finances have felt trickier to keep on top of lately, that’s because they are!
However: you don’t have to try and figure it all out on your own.
Montgomery Charles can’t make tax disappear. No one can. But we can help you see what’s coming – and work out a way through it before things get messy. It’s not about fancy strategies or jargon. It’s steady, practical help from people who’ve done this sort of thing more times than they can count—and know where things can go wrong.
If any of this feels uncomfortably close to your own situation—or even just makes you wonder what you’ve missed – it’s probably worth getting in touch.
Book a chat today
Use our online booking facility below to book a no-obligation, exploratory chat with one of our friendly adviser team – or call us on 01225 777 999.
Any money invested carries an element of risk and you are not guaranteed to get back the money you invested. This article does not constitute advice and you should consult your financial adviser prior to any action.
