INHERITANCE TAX – FUNDAMENTALS

Synopsis: The Government has launched a consultation to explore the possible options for extending the Inheritance Tax (IHT) exemption for armed forces personnel who die on active service to all emergency service personnel who die in the line of duty, or whose death is attributed to injuries incurred in the line of duty.

In his Budget Speech on 19 March 2014, the Chancellor announced that the Government would consult on extending the existing IHT exemption, for members of the armed forces whose death is caused or hastened by injury while on active service, to members of the emergency services. This consultation was launched on 23 July and is now underway.

The IHT rules already grant an exemption to the estates of members of the armed forces whose death can be attributed to, or is hastened by, injury or illness suffered whilst on active service. The legislation, at section 154 IHTA1984, provides a total exemption from IHT for assets that pass on the death of a current or former member of the armed forces who dies as a result of a wound, accident or disease inflicted when they were on active service or other service of a warlike nature.

The new exemption, which would be aimed specifically at emergency service personnel, recognises the risks that these individuals can face in serving their communities. The exemption would apply to a deceased person who was ’emergency service personnel’ in the United Kingdom and whose death has been caused directly, or hastened by an injury, sustained while responding to ’emergency circumstances’.

The Government is also proposing an extension of the current s154 exemption to any tax (or additional tax) that becomes payable as a result of death within seven years of a lifetime gift.

Legislation to give effect to the changes is planned for Finance Bill 2015 and would be effective for all deaths on or after the Chancellor’s announcement on 19 March 2014.

COMMENT

The s154 exemption can make a considerable difference if any part of the estate is left to anyone other than a spouse or civil partner (including a discretionary trust) and the consultation, which closes on 15 October 2014, will therefore be of considerable interest to advisers with clients in the armed forces, police, fire brigade, ambulance service and other ‘first response’ organisations.

Why not talk to the professionals about properly managing your finances

Call us on 01273 457100 020 7871 5387 01403 333666

Or email us on info@opusgold.com

Or just take a look at how we help our clients www.opusgold.com

 

Query Form
×