Death-in-service benefits of the armed forces

In ‘Moonstruck madness’ (Taxation 6 March 2025) John Woolley looked at the reforms to pensions and included a mention that some death-in-service benefits will now be caught up in the inheritance tax net. I assume that readers will have read that article. In this article I talk specifically about the death-in-service benefits of our armed forces.

Death-in-service benefits provide employees with a multiplier of their annual salary in a lump sum. This sum is usually held in a trust structure and is not accumulated with the value of an employee’s estate (property money and possessions) for the calculation of inheritance tax.

Usual treatment

As well as being the case for many employees in the private sector this is also true for members of the UK armed forces. The Ministry of Defence (MoD) published guidance regarding the Armed Forces Pension Scheme (AFPS 15) in...