Is there any inheritance tax exemption that may apply to the estates of key workers dying from coronavirus (COVID-19)?

While there has not yet, as far as we are aware, been clear and specific government guidance published about inheritance tax (IHT) exemption available for the estates of deceased key workers due to the coronavirus (COVID-19) pandemic, the existing IHT exemption for emergency personnel contained in section 153A of the Inheritance Tax Act 1984 (IHTA 1984) is likely to be available in certain cases.

Similar to the IHT exemption for the estates of persons who die in the course of active military duty or police officers targeted due to their role (contained in IHTA 1984, ss 154 and 155A), IHTA 1984, s 153A provides that there is no IHT chargeable on the death of a person who ‘dies from an injury sustained, accident occurring or disease contracted at a time when that person was responding to emergency circumstances in that person’s capacity as an emergency responder, or dies from a disease contracted at some previous time, the death being due to, or hastened by, the aggravation of the disease during a period when that person was responding to emergency circumstances in that person's capacity as an emergency responder’.

The IHT exemption extends to failed potentially exempt transfers and lifetime chargeable transfers made by the deceased in the last seven years of their life.

The exemption covers, among other things, circumstances which are present or imminent and are causing or likely to cause—

• (a) the death of a person

• (b) serious injury to, or the serious illness of, a person

‘Emergency responder’ is defined to include employed and volunteer workers in the medical profession and emergency services, as well as those providing humanitarian assistance and those engaged in the transportation of medical supplies or medical personnel.

In common with many exemptions and reliefs, this lesser known exemption does not apply automatically and must be claimed by the deceased's personal representatives.

It remains to be seen whether the exemption will be extended to include other key workers who have died as a result of the pandemic.

See Practice Note: IHT exemptions and reliefs on death and lifetime gifts.

See also Commentary: Exemption for death from responding to an emergency: Simon's Taxes [I4.211].

For further information on the implications of the pandemic for Private Client practitioners, see: Coronavirus (COVID-19) and Private Client—overview and Coronavirus (COVID-19) toolkit.