The Infected Blood Compensation Scheme

Written by Claire Thompson | Wills, Trusts, Tax and Probate team | 14 July 2026

The Infected Blood Compensation Scheme has been established to compensate those affected by the contaminated blood scandal. While no amount of compensation can undo the harm that has been caused, the scheme is intended to provide financial security for those impacted and their families.

If you are due to receive compensation, or have already received it, it is important to consider how it fits into your wider estate planning. In particular, there are inheritance tax (IHT) rules that could make a significant difference to your estate.

Parliament has recognised that compensation paid under the Infected Blood Compensation Scheme should not give rise to an inheritance tax liability. The compensation is intended to support victims and their families, not to create an additional tax burden. Legislation has therefore been introduced to provide inheritance tax relief for qualifying compensation payments.

Many people may wish to invest some or all of their compensation for the future. This could include purchasing a property, investing for retirement, or providing financial assistance to family members.

Importantly, the inheritance tax relief is not automatically lost simply because the compensation is invested or used to acquire other assets. However, when administering an estate, it may be necessary to identify the assets that represent the original compensation payment. For that reason, it is sensible to keep clear records of how the compensation has been used and, where practical, to keep the funds or assets acquired with them separately identifiable. Doing so can make the administration of your estate simpler and help your personal representatives claim any available relief.

The rules relating to the Infected Blood Compensation Scheme are relatively new and differ from the usual inheritance tax provisions. Taking specialist advice can help ensure that you benefit from the available reliefs while considering your wider estate planning objectives. After all, inheritance tax planning is not just about one payment; it is about ensuring that your estate is structured as efficiently as possible and in a way that reflects your wishes.

Our Private Client team can help you understand how the legislation applies to your circumstances, review your existing estate planning, and ensure your affairs are structured in the way that best reflects your wishes.

If you have received compensation under the Infected Blood Compensation Scheme and would like advice about inheritance tax planning, wills, or estate administration, we would be pleased to help. You can reach us on 01752 827067 or cthompson@nash.co.uk.