The government, through HM Revenue and Customs, is consulting on changes to the Inheritance Tax regime to encourage more people to leave legacies to charities in their wills.
The proposed change would see the rate of Inheritance Tax reduced from 40% to 36% to anybody who leaves more than 10% of their net estate to charity.
Martyn Brown, solicitor at Integrum Law, comments:-
If anybody is thinking that this new scheme might be a way of avoiding Inheritance Tax they are going to be disappointed. Somebody whose net estate is worth £500,000 would have to leave charitable legacies of £50,000 to save Inheritance Tax of £27,00and so, aside from the charity benefiting, there is no real saving.
However, anybody already considering making a will and leaving charitable gifts needs to be aware of this provision, and if, for example, they were planning on leaving charitable legacies amounting to approximately 8% of their net worth they may want to consider increasing this amount to bring them within the scheme.
Similarly anybody who has already made a will leaving monies to charity may wish to review their will and consider whether to increase any charitable gifts to take advantage of this scheme.
Of course this proposal is still only at the consultation stage and a lot could happen before it becomes law, but anybody thinking of making charitable donations in their will or with such donations in their existing will should watch what happens to this proposal.
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