Giving to a registered charity in your will can be a great way to reduce your inheritance tax and make sure you maximise the benefit of your estate for your chosen recipients.
If the value of your estate is over £325,000 then inheritance tax at 40% may be due on death. However if you choose to leave 10% of your chargeable estate to charity then not only is the gift exempt from tax, but the tax on the remaining estate can be reduced to 36%.
For example, if your estate is worth £500,000 then £70,000 inheritance tax will normally be due (40% of £500,000 less £325,000).
If you instead choose to give 10% of the chargeable amount (£17,500) to a charity in your will then there will be no tax on this gift and the chargeable amount will be taxable at 36% instead of 40%. As a result, only £56,700 will be due, a saving of £13,300.
This means that in order for the charity to benefit from £17,500, it has only cost £4,200. If you were leaving a small amount to charity anyway, then consider increasing the amount to 10% as a small increase could mean a significant saving for your other beneficiaries.
The show is a registered charity and if you want to help secure its future please think about leaving a legacy in your will. Consult your accountant or financial advisor to make sure you qualify fully for these tax discounts.