Inheritance Tax Act 1984 S153A provides an exemption from Inheritance Tax for an emergency responder whose death occurs as a result of responding to emergency circumstances.
The exemption applies where the death results from:
- an injury sustained, accident occurring, or disease contracted when that person was responding to emergency circumstances, IHTA84/S153A(1)(a), or
- a disease contracted at some previous time, the death being due to, or hastened by, the aggravation of that disease when the person was responding to emergency circumstances, IHTA84/S153A(1)(b).
There is no time limit on when the injury, accident or disease was incurred. It is important to note that for the exemption to apply, the person must qualify as an emergency responder and they must have been responding to emergency circumstances. It will be vital that records are kept and that with any estate planning that the exemption and likelihood of it applying is considered.
Emergency responder
IHTA84/S153A(6) sets out the services a person needs to be engaged in before they can qualify for exemption as an emergency responder. They are:
- person employed, or engaged, in providing fire services or fire and rescue services
- a person employed, or engaged, in search or rescue services (or both)
- a person employed, or engaged, in providing medical, ambulance or paramedic services
- a constable or person employed for police purposes or engaged to provide services for police purposes
- a person employed, or engaged, in providing services for the transportation of organs, blood, medical equipment or medical personnel, or
- a person employed, or engaged, by a government, international organisation or charity in connection with the provision of humanitarian assistance.
The employment or engagement does not have to be paid, so the exemption applies to both employees and volunteers.
The range of emergency services covered by the provisions is wide and will include not only the traditional emergency services – police, fire and ambulance – but also, for example, RNLI, HM Coastguard, Mountain Rescue, Cave Rescue, Air Ambulance, Community First Responders and lifeguards (both at a swimming pool and at the beach). It will include equivalent in-house services provided by other organisations, such as fire services at airports, oil rigs and refineries.
Emergency circumstances
It is important to note that a person must be responding to emergency circumstances in their capacity as a person ‘employed or engaged’ in connection with providing appropriate services – in other words when, as an employee, they are on duty; or in the case of a volunteer, when they have been called out to assist in dealing with emergency circumstances.
- A person will not be responding in that capacity if they are killed or injured whilst offering assistance at an incident whilst off duty, for example a doctor travelling at the weekend who attends a road traffic accident
- Equally, a member of the public who happens to be a qualified 1st Aider and dies administering 1st Aid will not qualify as an emergency responder as they are not ‘employed or engaged’ to provide those services within the meaning of IHTA84/S153A(6)(c)
- In the case of the police however, police officers are required to exercise the office of constable at all times, whether on or off duty. A police officer who attends an emergency will always be responding in their capacity as a constable and therefore within the meaning of IHTA84/S153A/(6)(d).
IHTA84/153A(3) sets out the situations that are ‘emergency circumstances’ for the purposes of the exemption. These are circumstances which are present or imminent and are causing, or are likely to cause:
- the death of a person
- serious injury to, or the serious illness of, a person
- the death of an animal
- serious injury to, or the serious illness of, an animal
- serious harm to the environment (including the life and health of plants and animals)
- serious harm to any building or other property, or g) a worsening of such injury, illness or harm.
IHTA84/153A(4)(b) sets out that a person is responding to emergency circumstances if they are:
- dealing with emergency circumstances,
- preparing to do so imminently, or
- dealing with the immediate aftermath of the situation.
Travelling to the emergency circumstances is specifically included by virtue of IHTA84/S153A(4)(a)
Emergency service personnel responding to emergency circumstances: evidence to show exemption is due
Personal representatives should provide such evidence as is available to show that the deceased’s death was as a result of, or was hastened by, their being an emergency responder who was responding to emergency circumstance.
Such evidence is likely to include:
- evidence that the deceased attended the incident in their capacity as an emergency responder. This could be in the form of evidence from the emergency service concerned, a police report or perhaps press reports
- a copy of the death certificate
- a medical report which should (if necessary) explain the link between the cause of death and the emergency circumstances concerned.
The extent of the evidence needed will vary depending on length of time between the incident and the death. Where the death occurs at the incident or very shortly thereafter, it is likely that quite basic information will be sufficient to prove entitlement to the exemption
Exemption applies to:
- any potentially exempt transfers (IHTM04057) made within 7 years of death. By virtue of relevant sub-section (a), potentially exempt transfers (PETs) do not become chargeable transfers under IHTA84/S3A(4) as a result of the death.
- the estate (IHTM04029) on death. The relevant sub-section (b) disapplies IHTA84/S4 and so no charge to tax can arise on the estate passing on death.
- any additional tax that arises on an immediately chargeable transfer (IHTM04067) made within 7 years of death. By virtue of relevant sub-section (c) no additional tax under IHTA84/S7(4) is due.
So the only chargeable occasion to which an exemption does not apply is where a person makes a lifetime transfer which gives rise to an immediately chargeable transfer. Tax at 20% is still payable where the nil-rate band is exceeded, and any such tax paid in the lifetime is not repayable should an exemption apply on death.
Article from ACCA In Practice