Losing a loved one due to an accident is devastating. Amid the emotional pain and trauma, bereaved families often face an additional burden: navigating an outdated and, in many ways, unfair legal and financial system that does little to recognise their suffering.
From limited bereavement award eligibility under the law, to new rules that could mean paying inheritance tax on pensions, the current framework places far too much pressure on grieving families already struggling to cope.
Bereavement Damages: An Outdated and Unjust System
Under the Fatal Accidents Act 1976, a statutory bereavement award is available when someone dies as a result of another person’s negligence. However, the law strictly limits who can claim this compensation and the amount itself is shockingly low.
Currently, only the following people can claim the award:
- The spouse or civil partner of the deceased
- The parents of a child under 18 (if legitimate, the mother only; if illegitimate, either parent)
- A cohabiting partner of more than two years, under certain conditions
That’s it. Siblings, adult children (over the age of 18 years) grandparents even long-term partners not cohabiting are excluded. Many families are left without any legal recognition of their loss.
Just as bad, the award itself is a fixed amount just £15,120. This figure has barely increased over the decades and is not tied to inflation or the emotional impact of the loss. It is, by most accounts, a token sum that fails to reflect the profound grief experienced by many.
Inheritance Tax on Pensions: A Looming Threat to Bereaved Families
As if this wasn’t enough, the government has now announced significant changes that will further burden families. From April 2027, pension pots will be brought into the scope of inheritance tax (IHT). This marks a major shift from the current rules, where pensions can usually be passed on free of IHT.
The Chancellor justified the move by claiming that pensions were being used as a “tax loophole.” But the real effect will be months of additional bureaucracy and cost for families who have just lost a loved one.
What the New Inheritance Tax Rules Mean for Bereaved Families
Under the new system, the responsibility for dealing with IHT on pensions will fall squarely on the executor of the estate — usually a grieving family member.
HMRC has published a five-step process that must now be followed:
- Contact all pension providers to confirm the deceased’s holdings
- Identify the size of the pension pots
- Establish who the beneficiaries are
- Calculate any inheritance tax due
- Ensure the tax is paid before applying for probate
This process will add significant delays to the administration of an estate. In some cases, the winding-up of financial affairs may stretch more than a year after the death. Trustees of pension schemes may also delay matters further when they retain discretion over who inherits the fund.
Double Taxation Concerns
To make matters worse, pension beneficiaries may also be required to pay income tax on the full amount they receive — even if part of it is then used to pay IHT. A system will be introduced allowing affected individuals to apply for an income tax refund, but the burden of navigating this will again fall on families already dealing with immense grief.
A System That Fails Families in Their Darkest Hour
While HMRC insists that most estates won’t be affected — for example, where the only pension beneficiary is a spouse — many grieving families will still be pulled into an administrative nightmare. The result is a system that compounds grief with red tape, forcing those left behind to become reluctant tax accountants during a time of mourning.
At a time when compassion and simplicity should be at the heart of public policy, bereaved families are instead met with bureaucratic hurdles, financial stress, and exclusion from compensation schemes that fail to reflect the true depth of their loss.
How We Can Help, Well, We Can
At R. James Hutcheon Solicitors, we specialise in supporting bereaved families through complex legal claims following fatal accidents. We understand how distressing this time can be and will handle your case with sensitivity, care, and determination.
We can assist with:
- Claiming for loss of dependency
- Navigating the bereavement award scheme in the Fatal Accidents Act 1976
- Helping with probate and inheritance tax issues
- Inquests and investigations into the cause of death
If you’ve lost a loved one due to a fatal accident and are unsure of your rights, get in touch with our experienced legal team. We are here to ensure your family receives the support, recognition, and compensation you deserve.
