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Win Win Tax Change For Charities And Families

Changes To Tax Law Could Benefit Charities and Families


Gillian Coverley
, Partner in the Wills, Trust and Probate team explains how the recent changes in legislation can benefit both charities and families.

Under new legislation which has come into effect for deaths occurring on or after 6 April 2012, there is an advantage in leaving charitable bequests in Wills.  If at least 10% of the estate which would be subject to tax is left to charity then the rate of tax payable on the rest of the estate is reduced from 40% to 36%.

Anyone leaving charitable gifts in Wills should review the amount they are giving to ensure that it is enough to take advantage of the reduced rate of tax.

For example:

A person currently having an estate of £500,000 is considering leaving charitable gifts of £15,000 and the rest to their children. As a consequence, they would have to pay inheritance tax on their estate of £64,000.  The charity would receive £15,000, the children £421,000 and the tax man £64,000.  If the gift to charity was increased to £17,500 then the children would receive £425,800 and the tax man £56,700.  By making a modest increase in the gift to the charity receives £2,500 more and the children £4,800, more all at the expense of the Treasury.

If you are interested in discussing this issue further, contact Gillian on 0370 1500 100 who would be happy to advise you further on the complexities of this change in the law to ensure that you can take advantage of the reduced rate for your estate.