We look at a change to the forces pension entitlement of partners of armed service persons, and recent changes to an Inheritance tax exemption that helps their families.
On 11 November each year, we remember those killed in armed conflict. This year the financial position of some of the partners of those killed whilst serving in the armed services will be improved. Before April 2015 if an individual had died whilst serving in the Armed Forces between April 1973 and April 2005, then his or her surviving spouse was entitled to a pension but that pension ceased on remarriage or other changes in circumstances. Since April this year those widows and widowers who now remarry, co-habit or form a civil partnership, will retain their pension for life. This is partly in acknowledgement of the fact that a life in the military makes it more difficult for those partners to build up their own occupational pension entitlements. Those surviving partners who remarried before this year’s change in the law will still not receive a pension and campaigners are lobbying for the reinstatement of their entitlement.
Some of the families of those deceased service persons may have benefitted from an Inheritance tax exemption under the Inheritance Tax Act 1984 which provides that assets left on death by a member of the armed services are exempt from Inheritance tax if the death was caused by injury or disease received or aggravated when he or she was on active service, or other service of a war-like nature. For example, Charlie is a RAF pilot killed during the Gulf War. He is single and owns a property valued at £475,000. On current rates there would be an Inheritance tax bill to pay on Charlie’s estate of £60,000, as his estate was not left to a surviving spouse or civil partner when no inheritance tax would be payable in any case, but if the exemption is claimed the bill will be reduced to nil.
It is possible to claim the exemption many years later if the individual dies of an injury or disease caused or aggravated whilst on active service. So in Charlie’s case if he had been paralysed in the incident rather than killed, and died some years later of a chest infection which can be linked to the inactivity caused by the original injury, then it might be possible to claim the exemption.
Originally the exemption did not extend to an Inheritance tax liability arising on death due to a lifetime gift made within seven years of death. This changed, however, for deaths after 19 March 2014.
The exemption was also extended at that time so that it can be claimed by members of the emergency services and humanitarian aid workers responding to emergency circumstances, whether paid employees or volunteers. No doubt in recognition of the climate in which we live, it now also applies to police constables and service personnel targeted because of their status.