Those administering estates should look into the causes of death of people with military connections
If a member of the armed forces is killed at war their estate is exempt from inheritance tax. This exemption, although perhaps not widely known among the general public, is something most practitioners who deal with estate administration will be aware of.
What is less well known is that the exemption covers not only those who die on active service but also those who were wounded or contracted a disease on active service, even if their death was not until some time later. To achieve the exemption in this instance it must be proved that the war wound or disease was a contributing factor in their death.
The exemption also extends to diseases contracted before active service, if it can be proved death was “due to or hastened by the aggravation of the disease” during active service.
The exemption covers not just those on active service but also those on service of a “warlike nature” which, in the Treasury’s opinion, “involved the same risks”. This means it is not only the estates of service men and women that can obtain the exemption. Those of medical staff and even war correspondents could qualify too.
To obtain the exemption, a certificate must be issued by the Defence Council or the secretary of state to confirm the conditions for the exemption have been met.
The question of whether the conditions are satisfied rests solely with the appropriate certifying authority, currently the Service Personnel & Veterans Agency. HMRC has no discretion to refuse the exemption once the certificate has been issued.
The exemption is not widely publicised and can be easily missed. This may be so even in circumstances where the solicitor administering the estate is aware of the exemption because, while a death certificate sets out cause of death, it does not state how that cause originated.
Nick Mendoza, a solicitor in my department, recently administered the estate of a gentleman who died aged 87. His cause of death was listed on the death certificate as “(i) pneumonia (ii) chronic obstructive pulmonary disease” so there was nothing, on the face of it, to suggest a causal link between the deceased’s active service and his death.
Nick had established, however, that the gentleman had served in the Second World War. He had been part of the Arctic convoys, spending two years in freezing conditions, and had developed pulmonary tuberculosis as a result.
At Nick’s suggestion the estate was able to call upon the gentleman’s medical records to prove the pulmonary tuberculosis he had developed while in the Arctic had been a contributing factor to his death, resulting in the exemption being granted.
This shows there may be instances where, unless the family is aware of the exemption or the solicitor takes it upon themselves to delve further into the cause of death (not an easy thing to do when dealing with a grieving family), entitlement could be overlooked.
HowardKennedyFsi solicitor Nick Mendoza assisted with this article