Gifting to charities in a will

Published by Sophie Fillmore on 2019 08 21

Gifting to charities in a will

Leaving money in your will for a charity is not only a positive legacy for the future but it can also reduce the rate of Inheritance Tax payable on the balance of your estate.

Of course, you don’t have to wait until you die to donate to a charity, perhaps it’s a charity you have supported all your life making regular donations. You may donate through Gift Aid, meaning charities can claim an extra 25p for every £1 you give (every little helps!)

If you are in the Higher rate tax bracket, did you know you can claim the difference between the rate you pay and the basic rate on your donation. Example: you donate £100 to charity – they claim Gift Aid to make your donation £125.  You pay 40% tax so you can personally claim back £25.00 (£125x20%). More information on this can be found at: https://www.gov.uk/donating-to-charity/gift-aid

Your will lets you decide what happens to your money, property and possessions after your death.  You have a choice when it comes to how you gift money.

What to do

If you want to leave money to a particular branch of a charity, first check this is possible; some aren’t entitled to accept legacies and suggest discussing your wishes with the charity and your family members.  

You have three ways to donate:

  • A fixed amount, stated in your will that you wish to leave £X to chosen charity
  • An item such as property or shares
  • What is left over after other gifts, taxes, debts etc have been arranged

The trustee/executor of your will can also decide.

Top Tip: Remember to include the details of the charity including its registered number and address to avoid any disputes.

Inheritance Tax bill (IHT)

The Inheritance tax threshold is currently standing at £325,000. Beyond this is subject to IHT at 40%.

Leaving part or your entire estate to charity can reduce, and in some situations, eliminate the Inheritance Tax liability.  If you leave at least 10% of your estate, after any exemptions, to charity, this reduces the rate of any IHT due from 40% to 36% - which could save thousands.

Any gift you make to UK charities is free of inheritance tax.

If you have any questions regarding IHT or gifting to charity, please contact our independent advisers who specialise in estate planning.

Source: gov.uk

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