Infected Blood Compensation to Be Exempt from Inheritance Tax
Bright Insights: Post-Budget Analysis
The Government has confirmed in the Autumn Budget that compensation payments made under the Infected Blood Scheme will now be fully exempt from inheritance tax (IHT). This exemption will apply regardless of how or when the compensation is inherited, ensuring that families of victims receive the full amount intended.
Background: A Historic Injustice
The infected blood scandal of the 1970s and 1980s remains one of the most serious public health failures in the UK. During this period, thousands of individuals with bleeding disorders were treated with contaminated blood products containing HIV and hepatitis. The true number of victims is still not known, and the consequences continue to impact lives and families decades later.
Following the findings of the 2022 public inquiry, interim compensation payments began to be made to victims. However, a significant legal loophole meant that where an affected individual passed away before receiving their payment, the compensation formed part of their estate, making it liable to inheritance tax.
Closing the Loophole
Organisations including STEP and the Association of Lifetime Lawyers campaigned strongly for this to be corrected, emphasising that families should not face a further financial injustice after decades of suffering.
The Autumn Budget has now addressed this issue. Compensation paid under the Infected Blood Scheme will be fully exempt from IHT, even where the payment is made after the victim’s death or passes through their estate to beneficiaries.
A Long-Awaited and Fair Outcome
This change has been widely welcomed. It ensures that the support intended for victims and their families is not diminished by tax liabilities and acknowledges the extraordinary circumstances surrounding this tragedy.
How Bright Solicitors Can Help
The Private Client team at Bright Solicitors is available to advise families who may be affected by this change or who need assistance navigating estate administration or tax implications.
If you require guidance or would like to discuss your circumstances, please contact our team.
