Giving to charity could reduce your inheritance tax
Under current law, if your estate is worth more than £325,000, your beneficiaries will have to pay 40% of the part of it that’s over the threshold to HMRC.
By leaving at least 10% of the ‘net value’* of your estate to charity, you can cut the Inheritance Tax (IHT) rate of your estate from 40% to 36%.
If you are already planning on leaving more than 4% of your net estate* to charity you could consider increasing your legacy to 10%. This increases both the charity legacy and also the amount available to other beneficiaries. There’s no further financial advantage to other beneficiaries from increasing the charity legacy above 10%** of the net value. However, if you are planning a significant charity legacy, the other beneficiaries still benefit from the reduced rate of IHT.
Please speak to your solicitor who will be able to provide you with advice specific to your circumstances. Currently the threshold for IHT is £325,000 for individuals. Married couples and members of civil partnerships are able to transfer any unused allowance to a spouse or partner so that they can leave up to £650,000 before death duties are due.
If you are considering leaving a gift in your Will to the Marlborough College Foundation, your solicitor or professional adviser will be able to give you more detail, and guide you through the different types of gift you can leave.
*The net value of an estate is the total value of all the assets after deducting: debts and liabilities; reliefs; exemptions, e.g. anything left to a husband, wife or civil partner; anything below the Inheritance Tax threshold of £325,000 (known as the ‘nil rate band’)
**If you are the beneficiary of an estate that has not taken advantage of the full amount available as 10% charitable gift and the tax advantages this can confer, then it may be possible to vary the terms of the Will in order to do so. The precise impact this will have on the amount of any tax paid depends on the circumstances and you should seek professional advice on both this and what needs to be done to make a variation to a Will.
You will need to have our charity name and number for your Will.
Charity Name: Marlborough College Foundation
Charity Number: 1061798