Two representative and regulatory bodies are calling on the government to urgently reform a ‘critical gap’ identified in the tax liabilities of compensation paid to those affected by the Infected Blood scandal.
More than 30,000 people were infected with HIV and hepatitis C in the 1970s and 1980s through contaminated blood products. Following a public inquiry, the government allocated £11.8bn in compensation.
Now, the Association of Lifetime Lawyers (ALL) and STEP are calling for urgent legislative reform to address a serious inheritance tax oversight affecting families of victims in the Infected Blood scandal. While HMRC has confirmed these payments are exempt from inheritance tax, legal practitioners have identified a critical gap: where victims died before receiving compensation, payments to their estates are being taxed during secondary transfers.
Joint statement from The Association of Lifetime Lawyers and STEP
In 2024, the government announced it had set aside £11.8bn to compensate victims of the infected blood scandal, after a public inquiry found the authorities had covered up the scale of the failings. More than 30,000 people in the UK were infected with HIV and hepatitis C after being given contaminated blood products in the 1970s and 1980s, and it is estimated that 140,000 victims, including bereaved parents, children, and siblings are still waiting for compensation.
HMRC previously ruled the compensation payments to victims and bereaved family members would be exempt from inheritance tax. However, because some of these payments have been delayed, they are going to the estates of people who died before receiving them. As a result, the money has been treated as part of their estate and may be taxed when it is passed on to someone else – a situation known as a ‘secondary transfer’.
The Association of Lifetime Lawyers (ALL) and STEP, the professional body for trust and estate practitioners, together with the barristers’ chambers Ten Old Square, are collaborating with HMRC to address the secondary transfer issue. Together, we are helping to draft legislation that will enable the necessary legal changes. HMRC acknowledges that this matter requires further investigation and is actively working with us to find a resolution.
Spokesperson for The Association of Lifetime Lawyers and STEP, Jade Gani TEP, said
“Members of The Association of Lifetime Lawyers and STEP undertake additional, ongoing training so we’re ready to support people who are vulnerable and families facing complex situations. We help people plan ahead and get their affairs in order.”
“While working with a family that was affected by the infected blood scandal, I identified that they and others may now face a secondary injustice with an unfair and unexpected tax on their compensation.”
“We’re currently in talks with HMRC and are grateful for their ongoing engagement, responsiveness and proactive efforts in addressing the inheritance tax implications for families affected by the Infected Blood scandal. We are encouraged by the progress being made so far, and are hopeful that legislative change will bring about a fair and compassionate resolution.”
ALL and STEP have asked for anyone affected to contact them in confidence via communications@step.org or lifetimelawyers@jackandgrace.co.uk.
