IHTM04423 - Compensation for wrongs suffered during World War II: how to apply the relief

The effect of IHTA84/S153ZA (and, before it, Extra Statutory Concession F20) is that the relevant payment(s) is to be left out of account in determining the value of the chargeable estate. This means the whole aggregable estate of the deceased so the benefit of the deduction will not only apply to the Free Estate but also, for example, to the tax due on settled property (IHTM16000) and gifts with reservation (IHTM14301) etc.

It also means that the benefit of the reduction will be given to estates where the Free Estate is, say, spouse exempt (IHTM11031), but other aggregable property exceeds the threshold

To achieve this, you must reduce the amount of tax that is chargeable rather than give a deduction against capital. To do this within the current assessing framework, you should include a figure which is the lesser of

• 40% of the payment(s) received, or
• the actual tax due before allowing the reduction

in the Quick Succession Relief (QSR) (IHTM22041) box on COMPASS (IHTM31101) and include a suitable note on the calculation(s). The subsequent calculations will automatically apportion the benefit of the reduction across the estate as a whole. In the rare event that QSR is also due simply add the figures together.

Claimants have been asked to preserve their award letter as evidence of entitlement and there is a good chance that a copy of that letter will be attached to most Accounts. Where the letter is not attached and the tax is reduced then

• if there is no other reason to write to the personal representatives, you should not write just to obtain a copy of the letter, but
• if you are conducting a compliance check, you should ask the personal representatives to send a copy.