Tax concession for Nazi victims

Inheritance tax will be waived on compensation paid by the German government

Victims of the Nazi regime during World War II will not be liable for inheritance tax on the payments received from the German government, following a recent ministerial decision.

The concession, already given to Britons who were Japanese prisoners of war, now covers payments to UK residents made from the German public law foundation "Remembrance, Responsibility and Future".

The foundation primarily provides financial compensation for those who were made slaves or forced labourers during the Second World War.

Some surviving spouses are also covered.

Under the current rules, rights to such compensation, or the subsequent proceeds, would be grouped with the rest of the estate and liable for inheritance tax.

Concession extended

The new rules mean that cash compensation payments will be excluded from the person's estate.

According to the Inland Revenue, ministers felt it necessary to change the rule where compensation is due because many people receiving the sums are old and would not have factored-in the compensation payment to their estate.

The tax concession only refers to cash received on payments made from the German public law foundation "Remembrance, Responsibility and Future".

Single lump sums of £10,000 payable to surviving Britons interned or imprisoned by the Japanese during World War II, or to surviving spouse, as announced in November 2000 are excluded also exempt from any inheritance tax.

For further information, see "Extra-statutory concession F20" (see link).