Individuals who leave behind more than 10 per cent of their estate to a charity in their Wills can save a significant amount of money on Inheritance Tax (IHT), but many Britons are failing to take advantage of this perk, it has been warned.
Earlier this week, This is Money reported that many British families did not realise that they were able to bequeath more money to their loved ones by taking advantage of the rules.
In England and Wales, IHT is incurred at a rate of 40 per cent on all estates valued at £325,000 or more. Naturally, this can often mean that a significant chunk of a person’s estate will go to the Treasury if they have not sought appropriate advice ahead of time.
However, by seeking specialist legal advice and leaving 10 per cent of their estate to a charity in their Wills, individuals can enjoy a reduced IHT rate of just 36 per cent on the remainder of their estate, which can make for some significant financial savings.
As an example, an individual with an estate worth £600,000 who made a 10 per cent donation to a charity in their Will would leave behind £483,400 for their family.
In comparison, if they donated only nine per cent of their estate to a charity, they would only leave behind £475,150 to their beneficiaries – £8,250 less.
This is because a donation of at least 10 per cent needs to be made in order for an individual to benefit from the reduced 36 per cent rate.
For specialist legal advice in relation to Wills and Inheritance Tax, get in touch with our expert team today.