How leaving a gift in your will to charity can help reduce your inheritance tax bill

Leaving a financial gift to a charity in your will means you’re not only supporting a good cause, it can also help your own family.

The topic was covered by Lisa Lodge, Vincents Solicitors private client director, and colleagues Chris Mathews and Nicola Hayes when they were invited to speak at two recent Gifts in Wills event held by St Catherine’s Hospice in Lostock Hall.

Nicola Hayes said: “Making a Will is about peace of mind, knowing those closest to you will be looked after.

“For many, it is also an opportunity to support a cause that has meant something special during their lifetime.

“Gifts in Wills help hospices like St Catherine’s continue providing comfort, dignity and support to patients and families through difficult times.

“Even a small share of an estate can help ensure that compassionate care is there for the next person who needs it.

“And for some, it is a simple and lasting way to say thank you.

“Beyond the personal meaning of leaving gifts in Wills, there can also be practical advantages.

“Donating money directly from an estate can help to reduce the amount of inheritance tax which must be paid on that estate.

“IHT is usually charged at 40% on estates worth more than £325,000. Consider the value of your home, savings, stocks and shares, pension and any other assets, and you may find your estate would fall into that bracket.

“However, gifts to UK-registered charities are exempt, which means they are deducted before tax is calculated and can reduce the taxable value of an estate.

“In some cases, a gift could remove the tax entirely.

“For example, an estate worth £400,000 could face a tax bill on the £75,000 above the threshold. But leaving that amount to charity would bring the estate back within the limit and no Inheritance Tax would be due.

“But this isn’t the only way to reduce IHT.

“There’s additional relief if 10 per cent or more of the taxable estate is left to charity. In this instance, the tax rate on the remaining estate reduces from 40% to 36%. This can allow both loved ones and the charity to benefit at the same time.

“It’s important to remember, a gift left in a Will does not affect your finances during your lifetime, you remain in full control of your money and property.

“A private client solicitor can advise on how to structure a Will so your wishes are clear and the available tax reliefs are applied correctly, ensuring your estate supports both your loved ones and the causes important to you.”

John Rullo, head of fundraising for St Catherine’s Hospice, thanked the Vincents team for taking part.

He said: “Financial gifts left to us in Wills are an important part of the community funding we rely on in the hospice sector, and we are enormously grateful to those people who choose to support us in this way.

“Our Gifts in Wills events allowed us to connect with friends of the charity who want to know more about this form of giving, answer their questions and show them what the money goes towards.

“It’s also really useful for people to understand that there can be benefits which go further than wanting to help a charity, and we want to thank Lisa, Chris and Nicola for explaining the process so well for our visitors.

“These were the first Gifts in Wills events we’ve held at St Catherine’s and the feedback we’ve had has been great, so we’ll look to do something similar again next year.”

For more information about leaving a financial gift to a charity in your Will, or any other wills, probate, lasting power of attorney, estate planning or inheritance tax queries, please contact Nicola Hayes on NicolaHayes@vslaw.co.uk or call 01772 555 176.