Yahoo Finance Families of dead war heroes feared to have needlessly paid inheritance tax
Families of dead war heroes may have needlessly paid large inheritance tax bills, the Telegraph can reveal.
Former defence secretary Sir Michael Fallon is among those to call for an investigation amidst fears that grieving military families could have been wronged by the taxman.
Relatives of those who died serving their country do not have to pay the hated 40 per cent death duty but are often unaware, military charities and solicitors warn.
It comes as The Telegraph is campaigning to abolish inheritance tax and more than 50 Conservative MPs have called on the Prime Minister to scrap it ahead of the next election.
An overwhelming majority of Telegraph readers have backed our campaign and called on Rishi Sunak and Chancellor Jeremy Hunt to abolish the tax in the Autumn Statement later this year.
Under complicated inheritance tax legislation introduced in 1984 the estates of armed forces members who die from a wound, accident, or disease suffered in active service are spared from the death duty under Armed Forces Relief.
But families whose relatives die years after the service are not told how to make a claim, prompting fears many will have missed out.
Sir Michael, Conservative defence secretary from 2014 to 2017, said: “If this is the case it should certainly be looked into. It would be absolutely wrong if veterans’ families are needlessly paying inheritance tax.”
The exemption is not also not easy to claim and requires detailed records.
Stuart Robinson, chief executive of military children’s charity Scotty’s Little Soldiers, said: “As a nation we should be doing everything within our power to support bereaved service families and not leaving them disadvantaged due the huge sacrifices they have paid in the service of their country.
“Many families may be unaware of the need to proactively claim relief and, whilst they are potentially dealing with many other challenges as a result of the death of a loved one, this is an additional and unnecessary burden to deal with.”
If an armed forces member dies in active service, then the Joint Casualty and Compassionate Centre – responsible for managing armed forces casualties – will send a certificate and paperwork to their family, to be sent to HM Revenue and Customs.
But families of ex-servicemen who died from their injuries years after leaving the military will not be sent anything. Instead, they must make a claim and hope they qualify.
Joe Cobb of the law firm JMW said military families were missing out on the valuable exemption because it was relatively unknown.
Families also have only four years in which to claim back overpaid inheritance tax.
Since the end of the Second World War, more than 7,000 military servicemen have died for their country, according to the Ministry of Defence, but many more have sustained wounds and diseases during active service.
Whilst families are able to easily claim back inheritance tax paid for deaths caused by injuries incurred decades ago, experts said it was harder to prove they qualify for the tax relief.
Alistair Robertson-Göpffarth, of the law firm Irwin Mitchell, said he has seen families rejected after their loved one died following exposure to asbestos in service.
Thousands of military veterans are known to have developed mesothelioma cancer due to exposure to asbestos during their service in the army, air force and navy. Now banned in the UK, asbestos was used throughout the 20th century to fortify ships, helicopters, tanks and support vehicles. Mesothelioma is almost always fatal, with most sufferers dying within a year of diagnosis.
A family’s inheritance tax claim could be turned down if they fail to prove a link between military service and asbestos exposure. They may be asked to specify details about their military service such as where their loved one was deployed – details that are harder to find if decades have passed since the deceased’s time in service. It can take 20 years for mesothelioma to develop after asbestos exposure.
The JCCC may also reject inheritance tax claims because the disease was not contracted “in the face of the enemy,” Mr Robertson-Göpffarth said.
A spokesman for HMRC said: “Overpaid inheritance tax has to be reclaimed within four years. We will make any repayments due as long as the claim is made on time.”
A Royal British Legion spokesman said that any member of the Armed Forces community concerned about their eligibility for the IHT exemption should seek independent financial advice.
A Ministry of Defence spokesperson said: “We highly value all the contributions that our Armed Forces and veterans make to protecting our freedoms and security, and remain committed to supporting them and their families, during and post service.
“Inheritance Tax exemptions may be issued to bereaved families where the former Service person has been found to have died as a result of actively serving in military activities of a war-like nature.”
