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Compensation paid by banks on unclaimed accounts, opened by holocaust victims and frozen during World War II, has already been announced as being tax by the Government. A new extra-statutory concession has been published to this effect, and is reproduced below.
'Extra-statutory tax exemption for compensation paid on bank accounts owned by holocaust victims
Compensation paid by banks on unclaimed accounts, opened by holocaust victims and frozen during World War II, has already been announced as being tax by the Government. A new extra-statutory concession has been published to this effect, and is reproduced below.
'Extra-statutory tax exemption for compensation paid on bank accounts owned by holocaust victims
'Under income tax law, compensation payments made in respect of dormant bank and building society accounts normally represent interest, and are therefore strictly subject to the tax deduction scheme for interest. That means such interest would generally be paid by a bank or building society net of tax to an individual investor unless the individual –
'* is a United Kingdom non taxpayer and has completed a registration form R85 to that effect and handed it to his or her bank or building society; or
'* is not ordinarily resident in the United Kingdom and a declaration to that effect on form R105 has been obtained by the bank or building society.
'Furthermore, death duties (estate duty, capital transfer tax, or inheritance tax, as appropriate) are potentially chargeable on United Kingdom account balances at death (even if the accountholder had no other United Kingdom connection).
'Under an initiative called "Restore UK", and announced on 8 May 2000 by the British Bankers' Association, compensation is being paid by banks on unclaimed accounts opened by holocaust victims and frozen during World War II under the Trading with the Enemy Act 1939. Where the investor of the monies in the unclaimed account was a holocaust victim, the banks have said they will make an exceptional up-rating payment.
'No tax will be payable on any monies paid out by banks or building societies under the "Restore UK" initiative to holocaust victims or their beneficiaries. This exemption will cover income tax liabilities on any compensation payments made on or after 8 May 2000 under the scheme, as well as death duties in respect of the capital held in the accounts.'
(Source: Inland Revenue press release dated 30 April 2001.)
