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The benefits of leaving money to charity in your Will

We look at why more people are leaving money to good causes in their Will, and how it could help reduce your inheritance tax bill.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

‘Tis the season of giving and this year (like any other year) charities are on the drive for donations. In the last 18 months especially, we’ve seen just how much we rely on charities to provide health and social support.

Christmas plays an important role in providing charities with the money they need to carry out their vital work, as do the gifts people leave in their Wills. These donations, or ‘legacies’, are a major lifeline for lots of charities. In fact, 16% of all fundraised income comes from Wills.

As they say, you can’t take it with you. You’ll probably have plans to leave some of your assets to people close to your heart, but you might also want to leave something to a cause close to your heart too.

We look at the reasons to consider making a charitable donation in your Will, and how a financial adviser can support you in making these important decisions.

This article isn’t personal advice. If you’re not sure what’s right for you, ask for financial advice. Remember, tax rules can change, and any benefits will depend on personal circumstances.

Leaving a legacy to a worthy cause

Writing a Will can mean more than just making sure your loved ones are provided for when you’re no longer around. Like an estimated 16% of people who leave a Will when they die, you could also use it as an opportunity to give to a charity.

When we reflect upon our life, we often think about the legacy we’ll leave behind and what impact we’ve had on the world. Leaving assets to a charity in your Will can help you make that impact.

Senior Financial Adviser, James Atkinson, has helped lots of HL clients do just that.

Lots of people want to give money to charities that are close to their hearts or that helped them in life. As you might expect, giving money to cancer or animal charities is extremely popular. But you can also leave donations to more specialised or local charities where your money can make a real impact.

And it’s not just charities either. People leave money to museums, universities, and amateur sports clubs. We’ve even seen money to music scholarships. It’s a way for clients to leave their mark.

James Atkinson, Senior Financial Adviser

How leaving money to charity could reduce your Inheritance Tax bill

The added benefit of leaving money to a charity (or other eligible causes) is that these gifts are exempt from Inheritance Tax (IHT).

You’ve got some flexibility in how you do this. You could either leave a cash gift for a certain amount in your Will, donate a certain percentage of your estate, or ask for the remainder of your assets to be paid to a charity after everything else has been given out. Leaving a cash sum or giving the remainder away might be a smart option if you want to provide for loved ones first.

The standard IHT rate is 40%. But if you leave 10% or more of your (net) estate to registered charities on death, the rate payable reduces to 36%.

There’s also no IHT to pay at all if you leave everything to charity. But this is a seemingly rare choice. We found* that three in four people planned to leave money to friends and family when they died.

Still, just under one in ten decided they wanted to give most of their money to charity instead, or spend it while they’re still alive.

*Opinium survey for HL, August 2021, 1,204 participants.

Not everyone will be affected by inheritance tax, use our calculator to see if you could be.

Use our inheritance tax calculator

How financial advice can help

The benefit of writing a Will and keeping it up to date is that you get to decide where your money goes. But it’s worth looking at your estate planning too.

When approaching your estate planning, it’s a good idea to think about your own needs as well as those who you want to benefit. Taking professional financial advice, alongside legal advice, can help you put together a well thought out strategy. Depending on your situation and requirements, our financial advisers can work alongside solicitors and Will writers to make sure the planning and legal elements are aligned. It’s also often a good idea to discuss your plans with your family (beneficiaries) where appropriate.

James Atkinson, Senior Financial Adviser

More on inheritance tax advice

Talk to us

The first step is booking a call back from our advisory helpdesk. They can tell you more about our advisory service and answer any questions you have about inheritance tax advice.

Our advisory helpdesk won’t provide personal advice. The aim of this first conversation is to help you decide if financial advice is right for you and discuss the charges involved.

If you want to go ahead, they can put you in touch with an adviser. Your adviser will then work with you to make sure you’re comfortable with the service you’ve chosen, and that you’re getting the right level of advice.

We can advise you on how to make the most of your tax allowances through financial planning, but if you need complex tax calculations we recommend speaking to an accountant.

Book a call back

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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