This post is similar to one in May querying the status of a compensation payment of around £200k received from the NHS s part of the Infected Blood scheme. Client received a letter telling her the compensation is free of income tax, CGT and IHT. I have suggested the use of a personal injury trust.
The client does not believe this is necessary and thinks the NHS letter gives her exemption from future IHT. We explained that our view is that the IHT exemption would apply if the claim had not been fully paid before the death of the victim. The claim would continue in the hands of the PRs but would be deemed to have a nil value for IHT. We cannot find anything in HMRC IHT Manual which relates specifically to the infected blood scandal.
Does anybody have any experience of these claims and is there any special treatment? I have dealt with a number of estates in and around Portsmouth where clients worked in the Naval dockyard and there was a compensation scheme for asbestosis - we never raised the issue of historic compensation payments in the context of claiming exemption for industrial injury compensation. when dealing with those estates. Be grateful for any reassurance that we are on the right track or any signposting to an alternative approach.
Michael McCabe