Leave a Lasting Legacy

We are one of the most generous countries when it comes to charitable giving, with a strong tradition of volunteering and raising money for a good cause.

Charities support our communities and play an important part in our society and lives.

However, it is a little appreciated fact that many charities wouldn’t survive without gifts from Wills. These gifts are the largest single source of voluntary income to the charity sector. For example, at the RSPCA, over half of their work was funded by people who left gifts in their Will and at Cancer Research UK, one-third of their funding comes from such legacies.

Despite the charity sector’s reliance on funding from gifts in Wills, the Gazette, in December 2020, stated that only 6% of people include charities in their Wills.

It may be that charitable gifting is considered to be the preserve of the wealthy, but even a small amount can make a big difference. Think of the great contribution your local cake sale made to a school and community project, with each person just spending a little bit of money towards a good cause.

At Ashtons, we launched a Wills Year Initiative where we donated £10 for each Will completed in an entire year to local charities through the Ashtons Charitable Trust. This helped to raise over £6,000 for charity in 2023.

Leaving money to charity is not just about compassion and generosity. It can also be a great tax-efficient way of making a donation to your favourite causes. As gifts to charities are exempt from Inheritance Tax, it is thus possible to lower your Inheritance Tax liability through charitable gifts. In addition, if 10 per cent or more of your estate is left to charity, then the Inheritance Tax rate lowers from 40% to 36%, reducing an estate’s liability to Inheritance Tax even further.

If a single person with no children had an estate worth £400,000 in total and decided to leave a legacy of £40,000 to charity (10% of the gross estate), a simplified Inheritance Tax calculation would look as follows:

• total gross estate: £400,000, less:
  • the nil rate band: £325,000
  • the sum charity exempt: £40,000
• value of the estate subject to inheritance: £35,000
• inheritance tax liability at 36%: £12,600.

However, if this person chose not to include a legacy to charity, then:

• total gross estate: £400,000, less:
  • the nil rate band: £325,000
• value of the estate subject to inheritance £75,000
• inheritance tax liability at 40%: £30,000.

As a result, the cost of the above legacy to the estate is only £22,600 (i.e. the cost of the legacy is £40,000, less the inheritance tax saving of £17,400).

There are also various ways to leave a legacy to charity in your Will. For example, when making a Will you could include:

• a legacy of a specified amount of money
• a gift of your personal possessions
• a share of your total estate to a chosen charity.

Contact our Wills and Estate Planning solicitors today

There are many other allowances and exemptions from Inheritance Tax, and at Ashtons Legal, we can work together with you to make sure that you are aware of the potential options available to you. Please get in touch with our specialist Wills and Estate Planning team by using our online enquiry form or by calling 0330 404 0768.