Reading an article this week I was alerted to a small section of the Inheritance Act of 1984 that I’d never come across before. It had never been mentioned in any professional qualification study material or any other material I’ve read over the years. Maybe this is because it was considered quite insignificant, but given the increasing number of Heroes who have suffered life changing injury in the service of the Realm maybe it’s one that we need to be aware of.
As most will know, if the value of an estate upon death is greater than certain tax free thresholds then the balance is generally subject to Inheritance Tax at typically 40%. Of course we can take steps to minimise this and many of us here at Richmond House Wealth Management can claim to be experts in this area, but with the growing value of property over the past few decades many who probably never thought or think of themselves as wealthy may find themselves with a liability.
Section 154 of the Inheritance Tax Act of 1984 contains a provision that allows a total exemption to inheritance tax under certain circumstances for those servicemen or women who have died during or as a result of active service, and to include service personnel who were disabled, wounded or contracted an illness whilst in the forces which resulted maybe even many years later, in their death.
As this exemption has to be applied for it is unlikely that many family members would be aware of it, and would not obtain this potentially highly valuable exemption.
We’re clearly not just talking about those who fought in World War Two, but those who were maybe killed or injured during active service in Northern Ireland, The Falklands, Iraq and Afghanistan, or other such service “of a warlike nature or which in the opinion of the Treasury involved the same risks as service of a warlike nature.”
Also, apparently if a family can establish that inheritance tax was levied in the past upon the estate of a former serviceman or woman when it shouldn’t have been, they can reclaim it.
Mark Ireland Chartered ALIBF
Chartered Financial Planner
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