Jun 2008 Journal

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AJR Report

Tax and benefit exemptions
We set out here confirmation that certain Holocaust restitution and compensation payments are disregarded when calculating entitlement to welfare benefits and are exempt from specific taxes.

Atrocity pensions
We have received confirmation from the Pension Service that an atrocity pension, such as a German Wiedergutmachung or payments from the Article II Fund, is fully disregarded when applying for pension credit.

DSS capital disregards clarified
Lump-sum compensation payments, such as slave and forced labour reparations, can be disregarded as capital when calculating housing- and income-related benefits following an extension to social security regulations announced in November 2001.

Income tax
At the instigation of the AJR, legislation passed in July 2005 makes exempt from income tax compensation payments paid by foreign banks and building societies, including dormant Swiss bank accounts, to Holocaust victims or their heirs. The announcement extended the terms of extra-statutory concession A100.

Separately, Section 330 of the Income and Corporation Taxes Act 1988 confirms that pensions and allowances paid to victims of Nazism are exempt from income tax. Importantly, this exemption applies to compensation received regularly but not to one-off or ex-gratia awards.

Capital gains tax
Awards made in respect of insurance policies under the terms of the International Commission on Holocaust Era Insurance Claims and for property in the former East Germany are exempt from capital gains tax in accordance with the terms of extra statutory exemption D50 (ESC D50).

Inheritance tax
Lump-sum compensation payments made in respect of personal persecution are excluded from inheritance tax (IHT) under the terms of an extra-statutory concession (F20) announced in March 2002. This concession allows the compensation to be deducted from the claimant's IHT-chargeable estate, whether the payment is made to the claimant before their death or is made subsequently to their personal representatives. This concession does not apply to compensation for assets or property.

Written enquiries should be sent to Central Office for Holocaust Claims (UK), Jubilee House, Merrion Avenue, Stanmore, Middx HA7 4RL, by fax to 020 8385 3075, or by email to mnewman@ajr.org.uk 

Michael Newman

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