medical negligence

[citywinthelot]

Hello all, My mother is likely to win a medical negligence case in the near future, and was wondering if there where any tax implications on both the sum awarded to her and sharing it with next of kin.
To sum up the case mentioned above, my late father received very poor aftercare following an operation and died of subsequent complications.

I did find the following on the net, before posting here, but still remain unsure.

Compensation received by relatives and others in respect of a deceased personal injury victim or emotional distress caused by another person’s death is similarly exempt, although the exemption only applies to ‘wrong’ or ‘injury’ suffered by individuals

Many thanks if you can help me.

[maths]

This is a complex area.

For what it's worth, if the deceased's right survives for the benefit of the deceased's estate then any award falls to be treated as part of the deceased's estate and thus in principle subject to IHT (typically arising under the Law Reform (Miscellaneous Provisions) Act 1934).

If, however, the damages are received under the Fatal Accidents Act 1976 they do not form part of the deceased's estate and thus no charge to IHT.

Others more knowledgeable than me may respond.

[citywinthelot]

Thanks maths, I have since found out that my mother will pay no tax, but unsure what happens if she gifts some away to closely affected family. I could and likely will be sharing probate rights,but not sure if that will make a difference.

[maths]

If the award is to just to your mother (ie the monies are her's and her's alone) then if she gifts some of the monies the gifts constitute potentially exempt transfers and IHT arises if she dies within 7 years thereafter assuming (which i suspect is not the case) that she has also made earlier large gifts.

If on the other hand the award is to each of you then no gifts from mother are presumably necessary.

[maths]

Sorry but missing:
what do you mean by "probate rights' ?