POW payments freed from tax
The £10,000 ex-gratia payment to be granted to surviving members of Japanese prisoner of war camps will not be subject to inheritance tax upon their deaths.
The concession was announced by paymaster general Dawn Primarolo today. The concession also extends to the surviving spouses of POWs, and the first payments are expected to be made in early February.
The tax-free, one-off payment was announced by the government on 7 November last year, following a claim made to the War Pensions Agency.
The payment is to be made to every single surviving member of the British groups held captive by the Japanese during the Second World War, in ‘recognition of the unique circumstances of their captivity’.
Under current inheritance tax rules, ex-gratia payments are subject to tax as part of the inheritors estate. However, under the concession, the £10,000 will be deducted from the chargeable estate, regardless if it was paid to the POW directly or to their spouse.
Claims for ex-gratia payments should be made to the War Pensions Agency