Families of the victims of two of Britain’s worst scandals face an inheritance tax sting on their compensation.
Ministers had promised that money paid to dead victims of the Post Office and infected blood scandals would be free from inheritance tax, capital gains tax and income tax.
But lawyers representing bereaved families have since discovered that this only applies to the first transfer of money from a victim’s estate. If the money went to a victim’s spouse or civil partner and they then passed it on to their children, that would be a second transfer and could be subject to inheritance tax at 40 per cent.
For the compensation to go to a child or someone other than a spouse inheritance tax-free, that recipient would have to be specified in the victim’s will as the beneficiary of the first transfer — not something that is possible for the children of victims who have died.
It is estimated that 30,000 victims were given blood infected with HIV, hepatitis B or hepatitis C by the NHS between the 1970s and early 1990s. More than 3,000 people have died as a result. Thousands of sub-postmasters were wrongly accused of taking money from their tills between 1999 and 2015
