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Exemption from IHT for armed forces, emergency workers and NHS/frontline workers

In April 2020, during the COVID-19 pandemic, the exemption from paying inheritance tax (IHT) on the estates of those who die in active service – already available to the armed forces and emergency workers – was extended to include NHS workers and frontline staff who die as a result of coronavirus in the line of duty.

Last updated on May 25th, 2022 at 03:24 pm

IHT exemption coronavirus

The extension was made following a suggestion to the government by a tax advisor and means that more people may not have to pay inheritance tax of 40%.

However, very few people were aware of the exemption in the first place, as it is not widely publicised.  It is not automatic and must be manually applied for.  This means that families of those who have died in service may still be paying IHT unnecessarily.

The ruling is part of the Inheritance Tax Act 1984 s 153A to s 155A.  The exemption was originally available to the armed forces and was extended in 2014 to include the police, fire service, ambulance service, paramedic service and other rescue services, such as the coastguard, when they die in the line of duty, responding to emergencies or where they die at a later date of a disease contracted whilst on active service.  Humanitarian aid workers assisting the government, charities and international organisations are also included.  Paid workers and volunteers are included.

In order to benefit from the exemption, the cause of death must be reported correctly on the death certificate.  Executors must manually apply for the exemption, but it can be done retrospectively, as there is no deadline, and any relevant IHT already paid should be refunded.

IHT exemption

Laura Cowan

IHT is payable on estates valued at over the nil rate band (NRB).  The NRB is currently £325,000 (or £500,000 if the residence nil rate band (RNRB) applies and your estate includes your main residence and is left to your direct descendants).  This is doubled if you have inherited your spouse’s or civil partner’s nil rate band.

If you are one of those sadly bereaved by the death of a someone who was a member of the armed forces or emergency services, or who worked for the NHS and you wish to find out if their estate is exempt from IHT, or need help in applying for the exemption, please contact Graysons’ probate manager, Laura Cowan now.  You can find out much more about IHT and administering an estate on our web pages.

Author: Laura Cowan, private client manager

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