Encouraging charitable giving

  • July 19, 2012
  • By Hunters Law

An additional Inheritance Tax (IHT) relief has been introduced which is designed to make it more attractive to individuals to bequeath part of their estate to charity. The change was made in the Finance Act 2012 and relates to deaths occurring on or after 6th April 2012.

The new IHT relief reduces the rate of IHT payable on a person’s taxable estate, from 40% to 36%, if 10% or more of their estate is left to charity.

Gifts to charities are already exempt from IHT, as are gifts to spouses and civil partners.  The new relief means that beneficiaries of a deceased person’s estate could benefit from a lower rate of IHT, so that the “cost” to them of more of the estate passing to charity is reduced.

The mechanics of the relief are not straightforward and will need to be considered carefully in each set of circumstances.  People intending to make a Will may wish to consider including suitable words to take advantage of the relief, but this must be done with care to avoid unintended consequences.  In some cases,  beneficiaries may find that it would be beneficial to enter into a Deed of Variation within two years of a death to increase marginally the amount left to charity.

Although the relief may be helpful, donors should still consider whether it would be more tax efficient or desirable for other reasons to give to charity during their lifetime, which can attract capital gains tax and income tax reliefs.

For further information, please contact a member of the Private Client Department.

Related News

Nov 03, 2022
Charities Act 2022 Series – Episode Seminar 2
Oct 31, 2022
Paul Ridout examines the inquiry into Moss Side and Hulme Community Development Trust in Charities Management
Sep 29, 2022
Charities Act 2022 Series – Episode Seminar 1
Aug 23, 2022
Dominik Opaliński discusses safeguarding in Africa in The Public Law Podcast
Aug 04, 2022
Paul Ridout discusses the latest inquiry report published by the Charity Commission into the conduct of trustees of the Moss Side and Hulme Community Development Trust
Jul 12, 2022
Paul Ridout examines the Charity Commission’s inquiry into The Captain Tom Foundation in Lawyer Monthly
Jul 12, 2022
Paul Ridout comments on charities’ annual reports in Charity Times
Jun 17, 2022
Paul Ridout discusses how UK charities are feeling the effects of the pandemic and the cost of living crisis in Finance Monthly
Apr 27, 2022
Paul Ridout comments on the number of charity mergers being at its highest level in five years in Charity Times
Dec 13, 2021
Paul Ridout discusses the reasons for incorporating a charity in Charities Management

© Hunters Law LLP 2023 | Privacy NoticeLegal & Regulatory | Cookies Policy | Complaints Procedure.

Hunters Law LLP is authorised and regulated by the Solicitors Regulation Authority (number 657218)