Have you considered donating to charity under your Will? It’s a great way to continue to support a cause that you are passionate about even after you have passed away. Leaving a gift to charity in your Will can also reduce the amount of inheritance tax (IHT) payable on your estate.
In the year 2014 (the most recently obtainable figures compiled by CAF) gifts made to charities by Will generated an income of £2.2 billion for UK charities. To put into perspective what this means for individual charities consider the following; Cancer Research UK obtains over 1/3 of its donations from charitable bequests, and over half of the work the RSPCA does is paid for by charitable bequests. As you can see from these figures remembering a charity in your Will can truly make a difference.
Why consider a charitable bequest?
Aside from being a great way to continue to support a charity that you have supported throughout your life or whose cause you feel strongly about, leaving a portion of your estate to charity can help reduce your IHT bill.
Assets gifted to charity in your Will will not count towards the total value of your estate for IHT purposes, so leaving a gift to charity can reduce the amount of IHT payable on your estate or even eliminate IHT altogether if the gift places the value of your estate below your Nil Rate Band (the IHT threshold, currently £325,000).
Furthermore, if you leave 10% or more of the net value of your estate to charity your estate may be eligible to pay a reduced rate for IHT of 36% on some assets (rather than 40%).
How to make a charitable bequest
To be eligible to pay the reduced rate the charitable bequest must be made to a charity that is registered in the UK and has a HMRC charity number. You must make sure to include the name of the charity (spelt correctly to avoid uncertainty), the charity number and the registered address of the charity in your Will. A receipt clause should also be included to enable the charities treasurer or secretary to accept the legacy.
There are various ways to remember a charity in your Will and you may wish to consider any of the following methods:
- Pecuniary legacy – A gift of a sum of money
- Specific legacy – A gift of specified property. This could be your house, car, jewellery or other personal property
- Residuary legacy – A gift of a portion of your estate after all debts, expenses and other legacies have been paid.
In 2016 the Society of Will Writers are working closely with the British Liver Trust to help them continue the good work that they do. SWW members are getting involved and some are donating money for each Will that they write.