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Overview

This guidance note explains the rules for IHT relief on compensation payments for wrongs committed during the Second World War (WWII) and for other state failures such as the Windrush, Post Office Horizon and contaminated blood scandals and for injuries during the Northern Ireland Troubles. A summary is provided of the treatment of other compensation payments received, receivable or where there is a right to make a claim, including PPI compensation and continuing NHS health care scheme payments.

There are many statutory schemes which compensate those who have suffered a loss or wrong. A large number of these are in respect of loss or wrongs suffered during the Second World War but there are also UK statutory schemes for compensation for state failures. The amounts received as compensation are exempt from IHT, but this is not achieved by leaving the amount received out of account. Details of how this is calculated are shown below.

It is not necessary to trace the receipt of the compensation into the death estate; just