Thinking of leaving a gift to charity in your Will?

By Richard Higgs, Chartered Independent Financial Planner

There are plenty of good reasons to think about leaving a gift to charity in your plans. Not only does it support a great cause but it can also help ease the burden of inheritance tax.

When you decide to leave something to a charity in your will your gift can either:

  • Be subtracted from the overall value of your estate before inheritance tax is calculated
  • Reduce your inheritance tax rate if at least 10% of your estate goes to charity.

You have choices when it comes to what you give – a set amount, specific items, or what’s left after other gifts are taken care of. When allocating 10% or more of your estate to one o r more charities, the inheritance tax rate on the amount above certain thresholds reduces from 40% to 36%.

It’s a good idea to check if a charity is registered with the Charity Commission to make sure it’s a trustworthy organisation. However, even if they’re not registered, you can still utilise inheritance tax benefits if they qualify as a charity under the Charities Act e.g. a local football club.

Keep in mind that if you specify donating a fixed amount to a charity, inflation might change its value significantly. Similarly, a percentage-based donation could end up being more or less than you intended if your estate’s value goes up or down a lot.

If you’re interested in learning more about legacy giving or other strategies to mitigate your inheritance tax burden, don’t hesitate to get in touch with Harold Stephens. As experts in financial advice, they can help you gain clarity and confidence in your inheritance tax and estate planning.

Call 0117 3636 212 or email to arrange a relaxed chat about your circumstances.
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