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Are Emergency Responders eligible for exemption from inheritance tax on their estate if they contract Covid-19 and pass away from it?
At the beginning of July we considered the exemption from inheritance tax that could apply to the estates of emergency responders who have sadly lost their lives, whilst saving the lives of others, during the Coronavirus pandemic.
The exemption was not designed for the pandemic and we had hoped that HMRC would issue specific guidance on its application to the estates of emergency responders who die as a result of contracting the coronavirus before too long. Unfortunately, it is still unclear how HMRC will approach claims to use this exemption, and the variety of cases that could potentially make use of it is increasing.
To recap, the exemption is available for a person who has died as a result of a disease contracted at a time when the person was responding to emergency circumstances in their capacity as an emergency responder.
Who could the Emergency Responders exemption cover?
There are certain situations which clearly fit within this test, such as the doctors and nurses who work on Covid wards treating patients with the disease and unfortunately contract the virus themselves. These people are on the frontline, responding to an emergency by providing medical services in their capacity as emergency responders.
However, the range of emergency responders is far greater and the link to the virus is often not as clear. For example, a surgeon who contracts the virus whilst operating on a cancer patient, or a paramedic who catches the virus when responding to a serious road traffic accident are also emergency responders responding to emergency circumstances.
There are many others, who may be slightly more removed from the immediacy of the emergency, but still provide invaluable and necessary medical services. Is the exemption also available in these cases?
What level of evidence is needed?
A key challenge, especially for cases that do not (at first glance) fit clearly within the exemption, is determining that the death was caused by catching the virus while responding to the emergency circumstances and that the virus was not caught elsewhere. The further removed the emergency responder is from dealing specifically with Coronavirus patients, the more difficult this is likely to be.
HMRC’s pre-Covid guidance on the exemption explains that the longer between the incident (responding to the emergency) and the death, the more evidence will be required to illustrate the link between the two.
In cases of emergency responders whose role is to treat Coronavirus patients, it is difficult to imagine HMRC taking a strict approach and demanding extensive evidence. However, in cases where the link to the virus is less obvious, we do not yet know what HMRC’s approach will be or the level of scrutiny and evidence they will require.
There are still many questions and unknowns in this area.
If you think that the inheritance tax exemption may be relevant to your circumstances and you would like to discuss it in more detail, please get in touch with our Private Client Team.