As well as helping the organisations which receive a legacy under your Will, giving to charity can also benefit your estate.
If your net estate is above £325,000 then your estate could be charged inheritance tax (IHT) at 40% of any amount above that limit.*
The charity exemption
However, any part of your estate which you give to charity is exempt from being charged IHT.
Example: If your estate is worth £350,000 but you give £25,000 to Ty Gobaith and the rest to your friend Bob then no inheritance tax is payable on your estate.
If your estate is worth £350,000 but you leave it all to your friend Bob then your estate may have to pay up to £10,000 in inheritance tax.
Charitable giving - reduced rate of tax
Furthermore, if you choose to give 10% or more of your estate to charity then any tax due on the estate will be charged at 36% instead of 40%. This might not seem like a huge difference but it could mean thousands of pounds extra is available to be passed to your chosen beneficiaries alongside helping the charities.
Types of gifts
When you make your Will, we can discuss the best way for you to give to your chosen charity or charities. Some of the options are:
- cash sum of a specific amount
- an item or property
- the 'residue' of your estate after any other gifts have been made.
For more information about making or reviewing your Will, please contact Carolyn on the details below.
Nelson Myatt Solicitors LLP
*This blog contains very basic examples and information. You should not rely on these when making decisions and should seek detailed legal advice about your own circumstances and the exemptions and reliefs which might apply to your estate.