New Inheritance Tax exemption on the way? article banner image

In the current climate where tax planning and tax reliefs generally appear to be coming under increasing attack and scrutiny from the Government it is refreshing to note that the Treasury have now followed up on the Chancellor’s announcement in the Budget on 19 March 2014 of the possibility of extending the exemption from Inheritance Tax (IHT) which presently extends to members of the Armed Forces whose death is caused or hastened by an injury whilst on active service to members of the emergency services.


The rule relating to members of the armed services exempts the value of their estates from IHT (normally charged at the rate of 40%) regardless of the size or value of the estate provided that it can be established that their death can be attributed to or was hastened by an injury or illness which was suffered whilst on active service.  The consultation paper issued by the Treasury suggests that this relief might best be extended to members of the emergency services whose death has been caused directly or hastened by an injury sustained whilst responding to emergency circumstances by applying similar rules.


It is proposed that members of the fire & rescue authority, relevant NHS bodies in the provision of ambulance or paramedic services including air ambulance services, police constables or others engaged directly or indirectly by police forces, HM Coastguard and members of a crew of a vessel operated by the RNLI would be included.

Life Time Gifts or Transfers

The present rules relating to members of the armed services apply only to the value of assets that pass on death.  Therefore, where the person concerned made gifts during the previous seven years which become chargeable to IHT on their death, the IHT on those gifts is still payable.  The consultation document suggests the relief should be extended to those life time gifts and similarly the consultation paper suggests the element of IHT payable on transfers made during the last seven years of the qualifying person’s life which were chargeable at the time should not suffer further IHT at the time of the death.

The consultation document invites comments by 15 October 2014; if the exemption is introduced it would be a welcome extension to the relief that is presently available to members of the armed services to those who also work in certain dangerous occupations within the emergency services.

Consultation document: Inheritance Tax: exemption for emergency service personnel

In an era where the availability of tax reliefs appears to be reducing, the introduction of new rules along these lines would be extremely helpful to the limited number of families that would benefit.

Stephens Scown have had extensive experience in dealing with claims for IHT relief for members of the armed services who have died as a result of injuries sustained on active service and therefore would be well placed to assist and advise families of those employed by the emergency services on the availability of this new relief if and when it is introduced.

Ian Newcombe is a partner and head of the private client team at Stephens Scown LLP in Exeter, which was named Private Client and Family Law Team of the year at the British Legal Awards 2013. To contact Ian for further advice, please call 01392 210700 or email