NHS and emergency service workers who die whilst fighting Covid-19 will be exempt from Inheritance Tax liability (“IHT”) on their estates.

A 100% IHT exemption has been extended to cover most NHS and front line workers applicable from April 2020; this exemption was originally introduced for members of the armed forces and was extended to cover emergency services (in emergency circumstances) in 2015.

More and more estates are facing sizable payments of IHT – notwithstanding the residential nil rate band  we are coming across many estates exceeding available tax allowances and reliefs.  IHT is payable at 40% on estates over £325,000 or up to £500,000 if a valid claim for Residence Nil Rate Band can be made, although for married couples and civil partners there is the ability to collate the exemptions therefore providing a global inheritance tax free allowance of up to £1 million (again subject to valid claims being made).  With many retired doctors, nurses and health care workers returning to work in the fight against COVID-19, putting their lives at risk, it is important that this welcomed concession is not missed.

The exemption is not automatic and some families could end up paying more than they need to unless a claim for the relief is made by the Legal Personal Representatives/ Executors (which can be done retrospectively).  Importantly, to meet the exemption qualification the cause of death must be reported correctly on the death certificate.

Frontline workers – those in the NHS and other emergency services – should seek advice from a solicitor to see if their own estate would be eligible for this new relief, if the worst was to happen. Alternatively, similar advice should be sought by those having lost loved ones whose estates face or have already faced a positive charge to inheritance tax, post April 2020,  to establish whether a claim for exemption from IHT is capable of being made (including retrospectively) for those deceased as a result of Coronavirus whilst in the line of duty.

If you or your family members require advice or assistance with Wills, lasting powers of attorney, tax planning or asset protection please don’t hesitate to contact Maria at MLonergan@kbl.co.uk or Chris Taylor CTaylor@kbl.co.uk on 01204 527777 or 01254 268790.