Give to charity and the tax man pays!
Pavilion Row is a supporter of ‘Remember a Charity’. Today sees the start of ‘Remember a Charity Week’ which seeks to bring awareness about the importance of charitable gifts in Wills.
Did you know that whilst 75% of people give to charity in their lifetime only 7% leave anything in their Will?
Following recent changes to inheritance tax (IHT) it is worth remembering when giving to charity there are tax advantages now available. If you plan to give 4% of your net estate to charity you can increase the gift to 10% without reducing the amount of inheritance the other beneficiaries receive. The tax man pays the difference!
From April 2012 IHT is reduced from 40% to 36% for people who leave at least 10% of their net estate to charity. This lower rate can only apply if part of the estate is chargeable to IHT at 40%. For example:
| Example 1 | Example 2 | ||
|---|---|---|---|
| Net Estate | £100,000 | Net Estate | £100,000 |
| Charity Receives 4% | £4,000 | Charity Receives 10% | £10,000 |
| Remainder to be taxed | £96,000 | Remainder to be taxed | £90,000 |
| Tax at 40% | £38,400 | Tax at 36% | £32,400 |
| Inheritance for other beneficiaries | £57,600 | Inheritance for other beneficiaries | £57,600 |
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