Caroline Keenan is Director of ASM Chartered Accountants and Honorary Secretary of Friends of the Cancer Centre. Caroline has kindly shared her professional advice on how you may be able to save on Inheritance Tax by leaving a gift in your Will to Friends of the Cancer Centre.

One way to help save on your Inheritance Tax (“IHT”) bill is to include a gift to a UK registered charity, such as Friends of the Cancer Centre, in your Will. Such gifts can be as small or big as you like.

When leaving a charitable gift in your Will to a registered charity, you can set out whether you would like to donate a fixed amount, a specific item (say property or shares), or whatever sum of money remains once the other gifts being made under your Will to family members and friends have been distributed.

For IHT purposes, the value of your charitable gift will be taken off the value of your estate before IHT is calculated. The normal rate of IHT applied to your estate is 40%. However, broadly speaking, if the gift to charity accounts for 10% or more of your taxable estate, the IHT rate applied is reduced from 40% to 36%.

The 10% gift figure mentioned above is calculated on your net estate after reliefs (such as Business Relief and Agricultural Relief) and exemptions (such as spouse exemption) but before any charitable donations are taken into account. For more complex estates (say including property held in trust), the 10% test is measured by reference to the part of the estate out of which the donation is made. If you believe your estate may be more complex, specialist advice should be sought to ensure that the IHT reduction applies as anticipated.

You may also wish to consider making gifts to a UK registered charity during your lifetime. If properly executed, you may benefit from Income Tax and Capital Gains Tax reliefs on these.

If you would like to leave a gift to charity in your Will, you should consult with your legal advisor to ensure that the wording included in your Will achieves the desired effect.

If you would like to review your IHT position and consider potential opportunities for tax savings (both during lifetime and on death), please get in touch with the team at ASM Belfast via email [email protected] 

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