You may wish to leave a gift to the church in your will. This has Inheritance Tax (IHT) benefits - not only is your gift exempt, but, since April 2012, if you give >10% of your estate to one or more charitable causes, the inheritance tax rate is reduced by 10% (from 40% to 36%) on the remaining estate.
How it works
The example below shows how this tax concession works in practice using a hypothetical gross estate of £1million.
We are using an estate of £1 million to keep the sums simple. Whilst £1million sounds like an awful lot of money, with the value of property nowadays, many of us may be more asset rich than we imagine!
The net result of a 10% donation means the estate’s beneficiary foregoes £16,200 but the charity benefits by £67,500.
The benefit to charitable cause(s) is four times greater than the cost to an estate’s beneficiary
|No donation||With a 10% Legacy Donation|
|Less Nil Rate Band||£325,000||£325,000|
|Net estate on which the
donation is calculated
|Charitable Donation||-||£67,500 (at 10%)|
|Less inheritance tax||£270,000 (at 40%)||£218,700 (at 36%)|
(only £16,200 less than the “no donation” scenario)