Question to the HM Treasury:

To ask His Majesty's Government how many service personnel will be impacted by the decision to charge inheritance tax on death-in-service benefits for members of the Armed Forces.

Answered by Lord Livermore - Financial Secretary (HM Treasury)

This information not available as the data does not distinguish whether a taxpayer is or was a member of the Armed Forces.

Estates of service personnel will benefit from the normal nil-rate bands, reliefs, and exemptions available. For example, the nil-rate bands mean an estate can pass on up to £1 million and the general rules mean any transfers, including the payment of death benefits, to a spouse or civil partner are exempt fully from inheritance tax. There is also a full exemption from inheritance tax when a member of the armed forces dies from a wound inflicted, accident occurring, or disease contracted on active service.

The government estimates that, out of around 213,000 estates with inheritable pension wealth in 2027 to 2028, 10,500 estates – or around 1.5% of total UK deaths - will become liable to pay Inheritance Tax where this would not previously have been the case. Around 38,500 estates will pay more Inheritance Tax than would previously have been the case. More information on the impacts of this measure was published in a technical consultation alongside the Budget.

A set of impacts for this measure will be published in a Tax Information and Impact Note alongside draft legislation in the normal way.