Pensions minister Torsten Bell has confirmed there will be a ‘full inheritance tax exemption’ for affected accounts and holdings.

The move was confirmed in a written statement from the pensions minister yesterday (19 May).

Bell said: ‘I am confirming that there will be a full inheritance tax exemption for the holdings of the remediation population affected by the NS&I tracing error which are returned to the estates to which they rightly belong.’

At the end of March, the government backed National Savings & Investments (NS&I) said that it had effectively lost customer savings from accounts and premium bonds amounting to £476m but could not explain how this happened.

This resulted in thousands of families being left unable to claim the money of deceased relatives held in the bank. The Treasury then appointed Sir Jim Harra, former CEO of HMRC to the bank’s top job on an interim basis.