National Savings and Investments tracing issue: tax treatment
This measure gives the Treasury a regulation-making power to introduce tax reliefs and administrative easements for holdings and payments affected by historic failures in National Savings & Investments (NS&I) tracing processes for bereavement claims.
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This measure will allow the Treasury to provide tax reliefs and administrative easements for people affected by historic failures in National Savings & Investments (NS&I) processes for tracing bereavement claims.
NS&I identified historic failures that meant some savings accounts were not traced and paid to the estates of customers who had died. NS&I is now returning the full value of these holdings to the affected estates.
To make sure estates are not disadvantaged by the delay, payments will be increased by the higher of:
- the interest accrued since the error occurred
- the Bank of England base rate plus one percentage point
Appropriate compensation may also be paid.
On 19 May 2026, the government announced that affected holdings would be fully exempt from Inheritance Tax. Personal representatives will also not have to pay Income Tax that would otherwise be due on interest accrued before the customer died or during the administration period. These reliefs are intended to prevent those affected from facing disproportionate costs or administrative burdens as a result of correcting the historic tracing failures.
The Treasury will be able to set out the detail of these reliefs in secondary legislation. This power will take effect from Royal Assent to the Finance Act 2027. Regulations may apply retrospectively but cannot increase a person’s tax liability.