Leave a Gift to Charity and Explore the Tax Benefits
In the UK, there are thousands of charities that are vying for our donations and commonly, towards the end of the year is when things begin to pick up in this arena. Many charities such as Children in Need, Movember and Go Sober for October are just a few worth noting but the list is much, much longer. Many people choose to do their bit for charity while they are alive but what about when they pass away?
Thousands of people around the UK play their part when it comes to raising money. Some will take part in runs or triathlons, some will shave their head while others might take on climbing challenges. However, why should giving money to charity stop there? For many, it doesn’t; as some choose to leave gifts of legacies in their Wills to many of the charities that they have supported during their lifetime.
If you want to leave money to a charity you have supported, or if you have decided to leave money to a charity that took care of a sick relative, then it is completely possible. In fact, you can leave a gift that comes with an expression whereby you stipulate how it is used. Regardless of what charity you leave a gift to, in doing so can also bring with it some tax benefits, which means that it might be possible to reduce the amount of inheritance tax that is paid on the chargeable part of an estate. However, this is determined by the amount that is gifted to charity.
If you leave a certain gift to charity in your Will, then this will not be taken into consideration when it comes to calculating the total chargeable estate. As a result, it becomes a tax-free gift which means that no inheritance tax is payable. In contrast, if you choose to leave your entire estate to charity then the estate will be exempt from tax
If an individual makes the decision to leave over 10% of the net estate to charity, this will also change the amount of inheritance tax that is payable. Therefore, the amount of inheritance tax will reduce from 40% to 36%.
When you have worked hard all of your life to build up your estate, you might decide to give something back. If so, it is worth carrying out all tax planning by using a professional service that can help you to make the right decisions. Therefore, if you are making a Will and want to leave a gift to a charity that means something to you then now is the time to do so. If you do decide to do this and opt to gift over 10% then it will mean that you pay less inheritance tax, so it could be something worth considering.