July 2, 2020

Frontline carers exempt from inheritance tax


There has always been an exemption from inheritance tax for emergency workers and serving military personnel who die in active service or through their work. This exemption applies to doctors and nurses, paramedics, ambulance staff and those transporting blood and organs, but not to care workers.

HMRC, recognising the sacrifice many care workers have and will make, has indicated that it will extend this exemption to employees of publicly funded care homes, home care workers, and to those employed by charities providing a service to combat Covid-19.

How will this exemption work?

Very broadly, inheritance tax is charged at 40% on estates valued at over £325,000 or £650,000 for a married couple. There is an additional banding given where the deceased passes on their residence to descendants of £175,000 (or £350,000 for a married couple). Certain conditions and rules apply to these figures, so advice ought to be sought in each case. The front liner relief (coined 'blue light exemption') will, importantly, extend not just to those carers who lose their life now but to those who lose their life at any point in the future if a clear link to the coronavirus can be proven.

Whilst it is recognised that many carers are amongst the lowest paid in the sector with estates that would likely fall outside of inheritance thresholds, it is a welcome move by HMRC.

It has yet to be tested how far this 'blue light exemption' will go. We would urge HMRC to extend the same exemptions to other key workers who may contract Covid-19 and lose their life as a result of the service they have provided.

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