Commentary

I4.129 Compensation arising from the Second World War (WWII), and other compensation schemes

IHT, trusts and estates

I4.129 Compensation arising from the Second World War (WWII), and other compensation schemes

I4.129 Compensation arising from the Second World War (WWII), and other compensation schemes

War pensions

For deaths on or after 1 January 20151, where the deceased or his estate has received compensation/ex-gratia payments for wrongs suffered during World War II, the tax on the payments received at the 'relevant percentage' is to be allowed as a credit against the IHT arising on the total value transferred on the deceased's death.

The relevant percentage is IHT at the rate applicable on death (40%) but the credit is subject to an upper limit of the amount of IHT chargeable on the death.

For deaths before 1 January 2015 the treatment was concessionary and provided that the amount of the payments may be left out of account in determining the chargeable value of the deceased's estate for the purposes of IHT on death2.

The compensation payments specifically mentioned are:3

  1.  

    •     ex-gratia payments of £10,000 from the War Pensions Agency by reason of his having been interned or imprisoned by the Japanese during the Second World War, or by reason of his having been the spouse of someone who was so interned or imprisoned but died before 7 November 2000 (known as the 'Far eastern prisoners of war ex-gratia scheme')

  2.  

    If the deceased or his estate received more than one such payment, eg by being both an ex-prisoner of war and the spouse of one, then £10,000 may be left out of account per payment

  3.  

    •     financial compensation of fixed amounts payable from

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