Infected Blood Compensation Scheme: Inheritance Tax
The question
To ask the Chancellor of the Exchequer, if she will make an assessment of the potential merits of ensuring that compensation payments for victims of the infected blood scandal are not subject to Inheritance Tax in circumstances where payments are transferred to a deceased victim’s next of kin and then passed on again to the next of kin's benefactors in a will.
Answered by James Murray
Infected Blood compensation payments are relieved from inheritance tax under Schedule 15 of the Finance Act 2020. This is applied to the estate of the recipient of the compensation payment. Where these payments are subsequently inherited, they become part of the beneficiary’s estate and are subject to standard inheritance tax rules, in line with normal practice for compensation schemes.
This ensures victims receive full compensation without tax burdens whilst maintaining fairness in the tax system and protecting the public finances.
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