Q&As

Do damages, received after the date of death in respect of a litigation action to which the deceased was a party, form part of the estate within the meaning of section 5 of the Inheritance Tax Act 1984?

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Published on LexisPSL on 17/05/2019

The following Private Client Q&A provides comprehensive and up to date legal information covering:

  • Do damages, received after the date of death in respect of a litigation action to which the deceased was a party, form part of the estate within the meaning of section 5 of the Inheritance Tax Act 1984?

Do damages, received after the date of death in respect of a litigation action to which the deceased was a party, form part of the estate within the meaning of section 5 of the Inheritance Tax Act 1984?

The meaning of ‘estate’ is defined in section 5 of the Inheritance Tax Act 1984 (IHTA 1984) and is the aggregate of all the property to which a person is beneficially entitled (subject to exceptions). ‘Property’ includes rights and interests of any description (but does not include a settlement power), IHTA 1984, s 272 (see Commentary: Meaning of estate generally: Simon's Taxes [I3.211] and HMRC Guidance: IHTM04031).

For the purposes of this Q&A, we have assumed that the shares had not been vested in the deceased and the situation relates to a claim to the shares. Hence, the actionable right in question is the property and therefore, the question is whether this constitutes a chose in action and consequently, whether it will be taxable. In order to gauge this, see Commentary: Rights or causes of action: Halsbury's Laws of England [7] which lays out what constitutes a choses in action. See also Commentary: Rights which are not

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