In 2017/18 HM Revenue and Customs collected £5.2 billion in
Inheritance Tax, but did you know that ex-service personnel
may be exempt from paying this?
The total number of estates liable to
pay Inheritance Tax has increased
every year since 2009 despite the
introduction of new allowances such
as the transferable nil rate band and
the residence nil rate band.
Everyone has an Inheritance Tax
personal allowance, meaning they
can leave an estate up to the value
of £325,000 before they pay any
Inheritance Tax, which is then
charged at a flat rate of 40%. Since
2007 spouses have been able to
transfer any unused allowance from
the estate of the first spouse who
passes away to the estate of the
second spouse.
Despite all these changes
Inheritance Tax receipts have still
increased. However, estates of
ex-servicemen and women who
have died from injuries sustained
while on active service can qualify
for exemption from Inheritance Tax.
So how does it work?
The rules state that if a serviceman
or woman dies while on active
service their estate will be exempt
from Inheritance Tax. This is also the
case if they pass away many years
later from an injury or illness they
sustained while serving.
We were recently instructed by the
family of an elderly man who had
completed National Service back
in 1948, having served aboard two
minesweepers. After completing
his National Service he had a very
successful career in the City. Sadly,
two years before his death in
2017, he underwent some medical
investigations and was diagnosed
with mesothelioma.
Mesothelioma is a fatal disease
which develops after exposure to
asbestos, yet it often doesn’t present
itself until many years later.
It was a known fact that asbestos lagged
pipes were present on the
minesweepers and therefore it was
highly likely our client was exposed
to the dusts while on board.
We established that our client was
exposed to asbestos on active
service some 69 years ago and
that he subsequently contracted
mesothelioma. Once our evidence
was accepted by the Ministry of
Defence they issued a certificate
to confirm that the exemption to
Inheritance Tax should apply, which
led to a full refund by HMRC to the
estate.
We have military and tax specialists
on hand to help with issues like this.
By being aware of this exemption,
medical and other evidence can
be collected and stored with a Will
supporting any future claim, should it arise.
Published: April 2019
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