During the Budget yesterday, Rachel Reeves announced that she will “exempt all payments from the Infected Blood Scandal from IHT regardless of the circumstances in which those payments are made.”

 The Treasury have confirmed:- 

“At Budget today, the Chancellor announced that the government will extend the existing system of IHT relief for payments made under the Infected Blood Compensation Scheme and Infected Blood Interim Compensation Payment Scheme. 

If the infected or affected person eligible for compensation has already died at the time compensation is paid, the estate of the first living recipient(s) of that payment will receive an ‘IHT credit’ to pass on the value of the compensation following their own death without an IHT charge. This change is effective immediately and applies to compensation payments made before or after 26 November 2025. 

The first living recipient(s) will also have two years in which to make a gift of some or all of the compensation payment they receive without an IHT charge. These changes will have effect for gifts of compensation made during the lifetime of the first living recipient on or after 4 December 2025. 

Both of the changes above will be legislated in the forthcoming Finance Bill. The legislation will be available when the Bill is published in the coming weeks. 

A Tax Information and Impact Note should be published later this afternoon at this link – Budget 2025 tax related documents – GOV.UK”