There is a tax exemption for compensation paid by both UK and foreign banks to Holocaust victims or their heirs which has arisen on dormant accounts belonging to those victims from the war-time era.
The legislation covers payments made under the Restore UK initiative and the Claims Resolution Tribunal arrangements for dormant accounts in Switzerland and any other comparable payments made by foreign banks and building societies.
The exemption covers payments under a compensation scheme representing
The exemption applies to payments made in the tax year 1996-97 or any later tax year.
In order to qualify for the exemption the original account holder has to be a “victim of National-Socialist persecution”. This means those persecuted by the National-Socialist regime on the basis of race, religion, physical or mental disability or sexual orientation.
Payments which qualify for exemption are exempt from income tax. Any gain arising on the disposal of a right to receive the compensation payment is exempt from capital gains tax.
Recipients of compensation payments may have been entitled to make a claim under the scheme in question by virtue of a relationship to the original account holder traced through deceased relatives. Therefore, the exemption also covers any additional inheritance tax (IHT) (or its predecessor taxes) that might have arisen to a deceased's estate in this chain immediately prior to the inception of the scheme involved, in respect of rights to the bank or building society account of an original account holder. By contrast actual payments of compensation from a scheme will, like any other asset, form part of the IHT estate of the recipient.
If you :
please ring the Holocaust Victims' Accounts office on 0151 472 6128 who will advise you what to do. Alternatively you can write to them at :
Holocaust Victims' Accounts
HM Revenue and Customs
St John's House
For enquiries involving inheritance tax please ring the Probate and Inheritance Tax Helpline on 0845 30 20 900 or write to them at:
PO Box 38
Castle Meadow Road
Nottingham NG2 1BB