22 May 2020

Inheritance Tax Relief for ‘Blue Light’ Emergency Workers

What is the inheritance tax relief for ‘blue light’ emergency workers?

What is the inheritance tax relief for ‘blue light’ emergency workers and how does it work? Stephanie Parry, solicitor in the Wills and Probate team, explains. The recent COVID-19 pandemic has shed light on a little-known inheritance tax exemption which was originally introduced as a way to support families and pay respect to the bravery and sacrifice of soldiers who were killed on active duty. This exemption was extended in 2015 to include emergency services personnel who die from an injury, accident or disease they contract whilst responding to an emergency through the course of their job.

Who qualifies as an ’emergency responder’?

The definition of emergency workers includes those who are employed in the main emergency services as well as volunteers, those transporting medical equipment and humanitarian aid workers. We still don’t know how far this relief will stretch but it does seem possible that the relief will be available to the estates of doctors and nurses who give medical care and support to seriously ill people if they die from coronavirus contracted at work.

We can expect this to take on a new importance given the coronavirus outbreak and a swell of public opinion and policy decisions in this area, as test cases are taken to HM Revenue & Customs and people ask for further clarification of when the relief applies.

How inheritance tax works

Generally, each estate has the benefit of an allowance (known as the nil rate band) of £325,000 and this can increase to £650,000 for married couples or those in a civil partnership. In addition, if an estate includes a property which passes to direct descendants such as children, further allowances can apply. Inheritance tax is charged at 40% on the balance over the available allowances.

If an estate qualifies for the ‘blue light’ relief, the normal inheritance tax provisions will not apply. The government has recently confirmed that the definition of an ’emergency worker’ includes medics and other frontline workers meaning their estates will be exempt from inheritance tax if they die from COVID-19, having contracted it at work.

As it is widely accepted that COVID-19 will continue to have an impact on all our lives for the foreseeable future, it is likely that this little-known exemption will become more important than ever.

The rules surrounding inheritance tax can be complex and it is important to seek legal advice to ensure the right steps are taken when you are dealing with an estate.

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