Targeted inheritance tax relief

Targeted inheritance tax relief

The publication of the Finance Bill (2015) brought an unexpected extension to the proposed IHT relief available to members of the emergency services. The extension relates to the deaths of constables (effectively all serving police officers) and members of the armed forces who die as a result of being “deliberately targeted” because of their status as a police officer or member of the armed forces.

This additional proposal will cover the cases of “a police officer, peacefully patrolling, who has a brick dropped on his or her head simply because he or she is a police officer” and the two female police officers killed by bullets and shrapnel in Manchester in September 2012.

Both these incidents would have been excluded by the initial proposals, which were highlighted in the September 2014 edition of Money Management. This addition to the legislation will widen the scope of the relief and make it important for all professional advisers to be fully aware of the detail: for example, many police officers will have been assaulted during their careers. However, even with this additional provision there are still three fundamental flaws in the draft legislation.

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The new relief

The changes are effective for deaths on or after 19 March 2014, so they apply now, even if the circumstances giving rise to the injury or disease occurred many years ago. The relief is in a similar format to the existing death on active service relief with the same wide causal connection. Firstly it applies to someone responding to emergency circumstances in the capacity of an ‘emergency responder’.

‘Emergency’ circumstances means circumstances present or imminent that are causing or are likely to cause:

- death or serious injury to or serious illness of a person or of an animal;

- serious harm to the environment (including the life or health of plants or animals);

- serious harm to any building or other property; or

- a worsening of any such injury, illness or harm.

There is a definition of what constitutes a person responding to emergency circumstances. This covers a person going to deal with such circumstances, preparing to, or dealing with the immediate aftermath. The respondent must believe and have reasonable grounds to believe there are or may be such circumstances.

The definition of emergency responder is wide, as shown in Box 1. Members of the general public could also be covered if engaged in the relevant activity (“it is immaterial whether the employment or engagement is paid or unpaid”).

The wording of the section dealing with who is an emergency responder covers a person employed or engaged in fire services and, through a state government, international organisation or charity, humanitarian assistance. For the other activities the reference is to a person employed or engaged to provide those activities.

‘Engaged to provide’ implies an official approval to do so, whereas ‘engaged in’ suggests just undertaking the activity. So is it possible a member of the public rescuing someone from a blazing building is covered, but one tackling a terrorist on the Tube is not, despite dying as a consequence in each case?

Another important addition is that the original relief for members of the armed forces on active service has been extended to cover those responding to emergency circumstances in the course of duties or as a civilian subject to service discipline. For example, developing a disease when ordered to respond to a UK flood or ebola emergency in West Africa. The phrase ‘in the course of the person’s duties’ would seem to exclude off-duty intervention.