A UK charity has warned that new Inheritance Tax (IHT) changes which took effect on 6 April 2017 are likely to inadvertently reduce the number of Britons who choose to leave money to charities in their Wills.
The comments relate to the introduction of the new Residence Nil Rate Band (RNRB), which now enables people who leave their home to children, grandchildren or other ‘qualifying beneficiaries’ in their Will to access an additional tax-free allowance of £100,000.
This is on top of the existing individual IHT allowance of £325,000, which means that UK couples can now potentially tap into a tax-free allowance of £850,000 – forecast to rise to £1m by 2020/21.
Remember a Charity, a not-for-profit organisation geared at encouraging legacy-giving, has voiced concerns that the increase to the tax threshold will mean that approximately 15,000 estates every year will no longer need to make use of the traditional tax breaks on offer to those who leave a charity donation behind in their Wills.
It says that legacy-giving has increased by 39 per cent in the last five years and that, on average, 8 per cent of UK estates have previously left behind donations of around £20,000 each.
However, it estimates that if such estates stray away from charity donations in favour of the RNRB in future, the not-for-profit sector could lose approximately £24m as a result.
A spokesperson from the charity has voiced concerns that “fewer people will be aware of their charitable options” unless solicitors go the extra mile to outline all of the options available to clients when giving Wills and IHT planning advice.
For a detailed an analysis of your circumstances and further information on legacy giving, the new RNRB or any other Wills and Inheritance Tax matters, please contact us.