What’s on the Horizon: Post Office scandal & deadlines

The Post Office Horizon scandal has been described as the UK’s “greatest miscarriage of justice” in modern history. Hundreds of sub-postmasters and sub-postmistresses were wrongly accused of theft and fraud due to faults in the Horizon IT system. Many endured devastating consequences, loss of businesses, reputations, and, tragically, lives. 

While compensation schemes have now been established, questions remain about what happens if the person entitled to compensation has died. This blog provides an overview of the schemes, the rights of bereaved families to claim, and the tax treatment of such compensation payments. 

The compensation schemes

Several redress schemes are in place to provide justice related to the Post Office Horizon scandal: 

• Horizon Shortfall Scheme (HSS) is designed to compensate those who experienced financial losses but were not part of previous litigation.

• Group Litigation Order (GLO) Scheme is for compensating those who joined the High Court action that exposed the scandal.

• Overturned Convictions Scheme is to provide financial redress for those whose convictions were quashed. 

Applications may be made on behalf of someone who has died. Personal Representatives can apply, ensuring that estates and families are not excluded from redress.  

Current developments related to the Post Office Horizon Scandal:

The compensation process has been under heavy scrutiny. In July 2025, inquiry hearings revealed delays and administrative failings, prompting renewed criticism from victims’ families. 

Some families have faced particularly painful experiences. In one reported case, a widow described receiving a compensation offer letter just days after her husband’s death as an “utter disgrace”. 

These accounts highlight the urgent need for sensitivity, efficiency, and clarity when bereaved families are involved. 

Tax treatment of Post Office compensation

From a legal and estate planning perspective, one of the most pressing questions relates to tax. 

In 2023, the Government confirmed that compensation payments made under the Horizon Shortfall Scheme and GLO scheme are exempt from Inheritance Tax (IHT) when paid to an estate. This exemption applies retrospectively, ensuring estates are not penalised for receiving compensation.

Other tax considerations for affected postmasters

In April 2025, the Government introduced the HSS Appeals (Tax Exemptions and Relief) Regulations 2025, which provide sweeping tax relief for those with compensation under the Horizon Shortfall Scheme (HSS) Appeals process. Under these regulations, payments will be exempt from Income Tax, National Insurance contributions, Capital Gains Tax, and Corporation Tax, and also relieved from Inheritance Tax. 

To understand what this means in practice, consider the scale of the compensation already being distributed. As of 2 June 2025, Post Office Ltd had paid approximately £283 million in Fixed Sum Awards to over 3,700 claimants, and a further £109 million in “top-ups” to those whose earlier settlements were under the £75,000 Fixed Sum threshold. 

Given those kinds of sums, the tax exemptions become critically important. For example, for a postmaster who receives a £75,000 fixed sum award, the relief means that none of that sum will be reduced by Income Tax, National Insurance, or Capital Gains Tax, and will also be exempt from Inheritance Tax if passed through an estate. In larger cases, where full assessments push awards well above £75,000, the value of exempting what might have been taxable income or gains can easily amount to tens of thousands of pounds in saved tax. 

However, there are important caveats: 

• Subsequent transfers may still be taxable. For example, if compensation passes first to a spouse (IHT-free) and then later to children, the second transfer could still attract IHT, depending on the value of the estate. 

• Will structuring matters. How compensation is directed in a will can affect whether tax relief is maximised. Executors should carefully consider estate planning implications. 

Recent commentary has also drawn comparisons with the infected blood scandal, where similar tax complications have arisen. 

For solicitors and personal representatives, the takeaway is clear: while headline exemptions exist, careful advice is needed to avoid unexpected tax liabilities.

What personal representatives and families should do

If you are a personal representative or a bereaved family member handling a claim: 

1. Check eligibility – review the relevant scheme and ensure the estate applies within the deadlines.
2. Prepare documentation – probate, grant of representation, and evidence of entitlement will usually be required.
3. Consider tax treatment – while the estate may benefit from IHT relief, the onward distribution could still carry implications.
4. Seek professional advice – to ensure both compensation and wider estate assets are managed tax-efficiently 

Even if you have already finalised the estate of someone who could have claimed, or a Grant of Probate was not necessary to administer the estate, we can still offer guidance and assistance with the application process.  

If you are unsure if you are eligible to make a claim on behalf of someone else, or someone else may have priority over you, we can also provide this clarity.

The Post Office Horizon Scandal: Why compensation makes estate planning essential

As of June 2, 2025, the Post Office has paid approximately £1,039 million to over 7,300 claimants through four compensation schemes for the Horizon scandal, with the Horizon Shortfall Scheme (HSS) being the largest at £559 million. The other schemes are the Overturned Convictions (OC) Scheme (£68 million), the Group Litigation Order (GLO) Scheme (£167 million), and the Horizon Convictions Redress Scheme (HCRS) (£245 million).  

Here’s a breakdown of the compensation by scheme:  

• Horizon Shortfall Scheme (HSS): Received a total of £559 million in payments. 

• Group Litigation Order (GLO) Scheme: Paid a total of £167 million. 

• Horizon Convictions Redress Scheme (HCRS): Payments totalled £245 million. 

• Overturned Convictions (OC) Scheme: Total payments amounted to £68 million. 

In total, these payments were distributed across four schemes, assisting over 7,300 postmasters who were affected by the faulty Horizon IT system. 

Our Wills, Trusts & Estates team can provide expert guidance on managing Post Office compensation claims, ensuring estates are administered efficiently and beneficiaries are protected. We can also discuss the possibility of placing the compensation into a Personal Injury Trust, in order to keep it ring-fenced. Contact us today to discuss your situation and safeguard your family’s financial future. 

Need support with Post Office Horizon compensation claims through attorneys and deputies? 

If an individual who may be entitled to compensation is not able to deal with the claim themselves and they have an Attorney or Deputy appointed to act in respect of their finances, they will be able to apply on their behalf.  If no one has been appointed in that regard, or the Attorney or Deputy requires assistance we have the expertise to assist.

Conclusion

The Post Office scandal continues to unfold, with compensation remaining a deeply topical and sensitive issue. For families who have lost loved ones, the process of claiming redress can be overwhelming. Executors and solicitors play a vital role in ensuring estates are treated fairly and that tax liabilities are minimised.  

Whilst money can never compensate for the loss and trauma caused, it may help facilitate support to deal with that and to create positive memories and legacies.

If you are handling a claim under the Horizon Shortfall Scheme or GLO scheme and need advice on the Post Office scandal tax treatment, our specialist Wills, Trusts & Estates team can help guide you through the process with expertise and empathy. Please send us your query at mail@anthonygold.co.uk or call us on 020 7940 4060 and we will do our best to help you and your family.