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Legal News | 1.06.23

Charity must start at home for inheritance tax reliefs

Until recently, a legacy under a Will to a qualifying charity or registered club established in the UK, European Union (“EU”) or European Economic Area (“EEA”) would attract charitable exemption from UK inheritance tax (“IHT”). Furthermore, if a testator leaves at least 10% of their net estate to such a charity, their estate would benefit from a reduced IHT rate of 36%.

If you have a Will containing a legacy to any EU or EEA charities, or are considering doing so, in the hope of benefitting from such IHT reliefs, you should take note of the following:  The latest Finance Bill now restricts the charitable IHT exemption to UK charities only. Therefore, individuals leaving legacies to any charities registered in the EU and EEA, but not in the UK, will no longer benefit from the potential IHT savings noted above.

If your Will contains legacies to EU and EEA based charities, you may wish to review the terms and consider if the changes introduced by the Finance Act will result in more IHT being payable on your death.

If you have any questions regarding charitable legacies and inheritance tax, please contact Wansbroughs’ Private Client team on wealth@wansbroughs.com.


Posted By Our Wills, Tax, Trusts & Probate Team