Inheritance Tax
Legacies to charity do not attract inheritance tax. Such gifts will be deducted from your estate before IHT liability is calculated.
If the total value of your estate is over £325,000* (the current inheritance tax threshold), your beneficiaries will have to pay 40% inheritance tax (IHT) on the amount over £325,000. However, gifts to charities in your will are generally exempt from IHT.
*Married couples and civil partners can combine their tax allowances. This allows the surviving spouse or civil partner to benefit from any unused portion of their spouse or partner’s allowance, so the threshold before IHT is due could be up to £650,000.
I included Livability in my will
Miss PS, Hertfordshire
Long-time supporter Miss PS recently wrote to us saying: “I chose to leave money to the charities which I suport regularly, when I learned that what is left after the Inheritance Tax allowance is not taxable if left to charities”.
Inheritance Tax Incentive
Draft legislation was published on 6 December 2011 introducing a reduction to the rate of inheritance tax (‘IHT’) imposed on the estates of individuals who give at least 10% of their net estate to charity. Where this reduction applies, the effective rate of tax on the chargeable estate falls from 40% to 36%. The details are complex and, as with all tax matters, we recommend that you speak to a Solicitor.
Link to the Government’s Inheritance Tax information page
