As well as the general philanthropic desire to donate to good causes, many people are increasingly making the most of the tax advantages available if you leave money to charity in your Will, allowing a reduction in inheritance tax (IHT).
Giving money to charity through a Will is likely to become even more common now that the IHT was increased in the Autumn Budget 2024 by bringing pensions into the IHT net.
Should I leave money to charity in my Will?
Instead of passing all your wealth to your family or other people dear to you, you may choose to leave some money to causes that are close to your heart. This could be an appealing option if your children or grandchildren are already financially self-sufficient.
We have seen a wide variety of charities benefitting from gifts in Wills, from major national organisations like the RSPCA to small local charities.
Leaving a gift to charity in your Will can also be a smart way to ensure your heirs benefit from a lower tax rate on their inheritance.
What advantages are there to leaving money to charity in my Will?
Gifts to UK charities are exempt from IHT. Additionally, if you leave more than 10% of the total value of your estate to charity you will benefit from a lower IHT rate of 36% applied to the remainder of your estate – compared to the standard 40% tax charge. Donating to charity through your Will therefore reduces the tax bill your heirs must pay – so you can pass more of your estate onto your loved ones.
The rules about gifting to charities in a Will can be complicated, and it is important that Wills are drafted correctly for the full benefit to be available. Simple errors can end up with the intended tax benefit not being achieved.
How TWM can help you
If you would like to review your Will in light of introducing or extending charitable gifts in your Will, our expert Private Client team can advise you on the steps you should take to protect your estate.
For further information and to discuss your requirements, please contact our Private Client team today for an initial no-obligation consultation.