Charitable donations could save you thousands in inheritance tax
The UK population generously donates on average £10 billion per year to charities, so why should this end on death? Did you know a charitable donation could save your estate inheritance tax? In the article below, I deal with three key questions when dealing with charitable donations.
How can I include a charity in my Will?
You can include a specific cash gift in your Will or a percentage of your estate. However, you can also leave property and personal possessions. On your death, the monetary value of the gift will be used to establish how much will be free of inheritance tax.
What is the benefit of leaving a charitable legacy in my Will?
You may decide to leave a charitable legacy for many reasons; you may have been supported by a charity through a difficult period in your life, or you may not have any significant others to leave your estate to. However, many of us do not consider how these legacies could reduce our inheritance tax bill on death.
The main thing to note is that any amount you leave to a registered charity in your Will is completely tax free. Essentially, this means that if your estate is worth £750,000 on your death and you have left the entirety of this to a registered UK charity, there will be absolutely no inheritance tax to pay.
What if you also want to leave your estate to a family member or friend?
You can still benefit from a gift to a charity, provided that this gift amounts to at least 10% of the total value of your estate. For example, if your estate is worth £600,000 on death and you gift £60,000 in your Will, not only will that £60,000 be completely tax free but your remaining taxable estate will be taxed at a lower rate of 36% rather than 40%.
If you would like to benefit from these provisions, please contact a member of our team and we will be happy to assist.