‘Perverse’ to charge infected blood victims’ families inheritance tax, MPs say

Plans to charge the families of victims of the infected blood scandal inheritance tax have been branded a “perversity” by MPs, who have demanded the Treasury rethink the move.

The criticism came as the Government launched a public consultation on proposed changes to the infected blood compensation scheme.

While the initial compensation payment would be tax-free, if the recipient died their family would be forced to pay inheritance tax, a situation one Labour MP branded a “perversity”.

The infected blood scandal has been dubbed the worst treatment disaster in the history of the NHS, after more than 30,000 people were infected with HIV and hepatitis C after being given contaminated blood and blood products between the 1970s and early 1990s.

During a ministerial statement on the compensation scheme on Thursday, Dame Meg Hillier, the chairwoman of the Treasury Committee, called for the Treasury to rethink charging inheritance tax on the payment, saying the state had previously “failed” victims.

She told the Commons: “It’s not a random and coincidental thing that they might die of something else, and then a family member inherits.

“They’re getting it because they’re dying (of infected blood), and if they happen to receive compensation just before they die, and their family inherit it, they pay inheritance tax.

“For this particular scheme, where the state failed people so much, it is really an important issue to resolve.”

Gareth Snell, the Labour MP for Stoke-on-Trent Central, added: “There is a perversity here that people who were failed by the state will very quickly be asked, potentially, to repay 40% of their compensation to the same state that failed them.”

Paymaster General Nick Thomas-Symonds said: “There is a single tax exemption, so when it is received in the first instance, it is received free of tax, but there’s then not a subsequent tax exemption.

“It is the situation that is in line with general government policy on tax exemptions across the board.”

Following repeated questions about the issues, Mr Thomas-Symonds said the strength of feeling in the Commons was “very clear” when asked if he would raise the issue with the Treasury.

The Paymaster General also encouraged the infected blood community to respond to the consultation.

The consultation sets out questions across seven issues: harm caused by interferon treatment, the special category mechanism and its equivalents, severe psychological harm, past financial loss and past care, evidence requirements for exceptional loss, supplementary awards for affected people, and unethical research.

He added that the Government has “sought initial advice” from a technical expert group to develop proposals, and to ensure “transparency,” with the minutes of their meetings so far published on Thursday.

The consultation will run for 12 weeks, and the Government will publish a response to it within 12 weeks of it closing.

The Government also laid down regulations on Thursday to implement five changes to the infected blood compensation scheme recommended by the inquiry.

These include the removal of the HIV eligibility start date, removing the minimum earnings threshold for a person to claim the exceptional financial loss award, removing the requirement for evidence of the date of diagnosis for Hepatitis B or C, making changes for deeming provisions for severity of Hepatitis C, and expanding the eligibility to include estates of all affected people who died between May 21 2024 and March 31 2031.

Mr Thomas-Symonds added that the Government is reinstating support scheme payments to partners bereaved after March 31 this year until they have received compensation. Applications for that reopened on October 22.

As of October 21, 2,476 people have received an offer of compensation and more than £1.35 billion has been paid, with offers totalling more than £1.8 billion.

A Government spokesperson said: “We have acted to deliver compensation as quickly as possible because we recognise that justice delayed is no justice at all.

“The Infected Blood Compensation Authority (IBCA) has paid more than £1 billion to date from the Government’s £11.8 billion fund set aside for victims.

“We have ensured victims’ compensation is exempt from Inheritance Tax when applied to the estate of the person to whom the compensation payment was made. This relief does not extend to subsequent beneficiaries of the deceased person’s estate.

“We are committed to making the system as fair and compassionate as possible and will continue to engage with victims and their families.”