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HMRC internal manual

Inheritance Tax Manual

HM Revenue & Customs
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Compensation payments: compensation under the Fatal Accidents and National Insurance (Industrial Injuries) Acts

Compensation received under these statutes does not form part of the deceased’s estate.

The scope of the Fatal Accidents Acts was widened by s.3 Administration of Justice Act 1982. Claims for damages for bereavement are now admitted for the benefit of the deceased’s spouse/civil partner (IHTM11032) or, in the case of an unmarried minor, his parents. A new s.1(1A) of the Law Reform (Miscellaneous Provisions) Act 1934, introduced by s.4(1) Administration of Justice Act 1982, specifically provides that a claim for damages for bereavement does not survive for the benefit of the estate of the claimant.

You should note that, in awarding damages to a dependant under the Fatal Accidents Acts, the Courts will first take into account any benefit received or receivable (as estimated) by the same person under the Law Reform (Miscellaneous Provisions) Act 1934 - see Davies v Powell Duffryn Assoc. Collieries Ltd [1942] AC 601.


The Court awards A’s widow £6,000 under the Fatal Accidents Acts.

There are prima facie good grounds for the award of damages under the Law Reform (Miscellaneous Provisions) Act 1934 (IHTM10264). It is not clear whether an action will be brought. The Court estimates the award in the sum of £2,000.

In effect the Court has awarded £4,000, i.e. £6,000 less £2,000, under the Fatal Accidents Acts because the benefit under the other legislation is taken into account first.

The £2,000 paid under the 1934 Act is taxable as part of the estate; but not in Scotland (IHTM10268).


You should note that, following Murray v Shuter [1975] 3 All ER 375, benefits under the 1934 Act can be taken into account only if they accrue in consequence of the death.