Charity Gifts and IHT

Each individual has a personal allowance of £325,000 before Inheritance Tax becomes payable on their estate.

A further relief called the Residential Nil Rate Band in the sum of £175,000 can be applied when a person owns their own property which will ultimately pass to direct descendant after their death.

Where a person’s estate exceeds their personal allowance, Inheritance Tax becomes payable at a rate of 40%.

One way of reducing the amount payable to Inheritance Tax is to consider a charity in your Will.  Gifts to charities can be in the form of a fixed legacy, a percentage of your residuary estate or even specified personal items. 

Leaving just 10% of your estate to charity can result in reducing the rate of inheritance tax payable on your estate to 36%, as well as having the benefit of helping a cause which may be close to your heart.