Around the world, emergency services from all nations are responding to the Coronavirus pandemic – with the NHS on the frontline (and bearing the heaviest burden) in this country, battling Coronavirus cases throughout the UK’s hospitals and care homes.
Being in such close proximity to those with the disease has meant that our emergency responders have put themselves in serious harm’s way – with many tragically losing their lives having contracted the virus in the line of duty.
It is difficult for the nation to adequately acknowledge the service and sacrifice of such individuals. In late April, the Government announced that the families of health and care workers who die from the disease in the course of their frontline work will receive a £60,000 life assurance pay-out – but this can only ever constitute a small token of the country’s appreciation.
As lawyers who support families in the administration of estates, we deal with the Inheritance Tax implications on the death of an individual.
There is existing legislation that allows the estates of qualifying “emergency responders” to be exempt from Inheritance Tax, and we believe this may be applied to the estates of emergency responders who contracted Coronavirus whilst responding to the pandemic.
This article explores the exemption and discusses how it could be applied to support grieving families at an incredibly difficult time.
Where is the exemption found?
Historically, the estates of members of the armed forces whose death can be attributed to / hastened by an injury or illness instigated whilst on active service have been exempt from Inheritance Tax.
Legislation in recent years has modified and extended this exemption, so that it now applies to those who responded to “blue light” emergencies – including, amongst others, paramedics, police officers, and those engaged in humanitarian assistance.
The extension is represented in s153A of the Inheritance Tax Act 1984.
Which estates qualify for the exemption?
The exemption includes application to the estates of any person who dies from a disease contracted at a time when that person was responding to emergency circumstances in that person’s capacity as an emergency responder.
The actual wording of s153A is wider – though we have cherry-picked the wording for the purposes of this article.
Could the exemption apply to NHS workers, doctors and nurses, responding to the Coronavirus pandemic?
In most cases, it will be pretty clear-cut to determine whether someone was an “emergency responder”. There is a list of qualifying occupations and roles in the legislation, and includes a person employed (“or engaged to provide”) medical, ambulance or paramedic services. Therefore, doctors, nurses and other such medical professionals and support staff could be covered.
On a similar note, and in the case of an NHS doctor or nurse who contracted Coronavirus from a patient that he or she had been assisting, it should also be easy to show that the person had been responding to “emergency circumstances” – which have been helpfully defined in the existing legislation - and cover circumstances that are causing or likely to cause death, serious illness, or a worsening of any such existing injury/illness.
Given the loss of life, the lockdown, and the language used by the Government (i.e. “Stay at home. Protect the NHS. Save Lives”), it might be difficult for HMRC to take a converse view that such emergency responders had not been responding to “emergency circumstances”.
Are there any other “emergency responders” that might benefit from the exemption?
The wording defining “emergency responders” is purposefully broad. Emergency responders can be voluntary (i.e. unpaid) and can include a person employed or engaged by a government, an international organisation or a charity in connection with the provision of humanitarian assistance.
In this light, there are circa 750,000 NHS Volunteer Responders that have been engaged by the Royal Voluntary Service who could also be covered by the definition.
In any case, the legislation permits the Government to extend the definition of “emergency responder” by subsequent rulings – and in the circumstances, it would be wise for the Government to do so and incidentally clarify which estates benefit from the exemption more generally (in the Coronavirus context).
Did the emergency responder contract Coronavirus at the time of response?
The main difficulty in obtaining the exemption may be in showing that the emergency responder in question died because they contracted the virus at the time of response.
Coronavirus symptoms appear to develop gradually and show only after a matter of days/weeks – how would one know for sure when and where the emergency responder contracted Coronavirus?
In the normal course of seeking the exemption, there is guidance on how to show that an individual died at the time of response (IHTM11295) - but questions remain as to how this might be tackled by HMRC.
However, a question to poise to HMRC, in this case, might be “how else would they have contracted the disease?” – the social distancing rules mean that it would make it more likely than not that the emergency responder in question would have been responding to emergency circumstances at the time they contracted Coronavirus.
As outlined above, there is legislation in place to exempt estates of qualifying emergency responders from IHT. We believe this could be applied to the estates of emergency responders who died responding to the Coronavirus pandemic – though the process of doing so could be made simpler if HMRC clarified the position in the wake of the pandemic.
We understand that for many of the families of Coronavirus victims, dealing with the administration the estate is in no way a priority in the wake of the immediate loss caused by the death of a loved one. However, when the time comes, the exemption could be applied to benefit the families of those who battled the Coronavirus and paid the ultimate price.
As Donna Kinnair, general secretary of the Royal College of Nursing, quite rightly stated in response to the government life assurance scheme discussed at the beginning of this article, “No amount of cash can make up for a family member who passes away but financial security should never add to the worries of those in grief.”
If you or your family have any questions regarding the exemption, or estate matters in general, please contact our team.