For those of us in the UK who have written a Will, an impressive one in five have included a charitable bequest. This represents a 43% increase in charitable legacies in Wills over the past decade.

This equated to a staggering  £4.5 billion in total legacy income, arising from gifts in wills,  in 2024.  This is forecasted to increase to more than £10 billion by 2050.

It is clear then that charities, big and small, rely heavily on donations in wills, but the tax treatment of such legacies can also be very beneficial when dealing with Estates where inheritance tax is likely to be payable.

So, how do you go about making a charitable donation in your Will, and what will be the inheritance tax implications of doing so?

How do I leave a gift to a charity in my Will?

Taking proper advice when writing your Will is crucial. Discrepancies or ambiguities in a Will can prove costly and could result in your Estate passing in a way that you did not intend. As a result, you should look to seek professional advice when preparing or updating your Will to include a charitable gift.

What can I leave to a charity under the terms of my Will?

If you know the charity or charities that you intend to benefit, there are a number of bequests you can make to charity in your Will;

  • A fixed cash sum (pecuniary gift)
    • Property or assets, such as paintings, jewellery, cars or other items (specific gifts)
    • A share (or the whole) of your estate after other gifts, costs and tax have been deducted (residuary gifts)

Alternatively, if you are unsure as to the charities you wish to benefit, you could leave some or all of your Estate in trust with a number of possible charitable beneficiaries. Your trustees would then make decisions as to how to apportion funds, on the basis of any guidance you have left them. When looking to utilise a trust arrangement, it is all the more important to take full advice as to the arrangement and tax implications of the same.

How does charitable giving in a Will impact inheritance tax?

Outright gifts to charity under your Will (excluding gifts into trust) are exempt from inheritance tax. For taxable Estates, charitable giving can therefore reduce or eliminate a potential inheritance tax liability.

For example, if Mr Smith, who only has a basic nil rate bad inheritance tax allowance, passes away leaving an Estate of £350,000, his Estate will be charged inheritance tax on any of his Estate exceeding £325,000. This is charged at 40%, so for Mr Smith his Estate would pay £10,000 in inheritance tax, unless any reliefs were available. If Mr Smith gave £25,000 to a qualifying charity in his Will, his taxable Estate would be reduced to £325,000 and there would therefore be no inheritance tax to pay.

In addition, where at least 10% of the net Estate is left to charity, the overall rate of inheritance tax rate is reduced to 36% instead of 40%. As such, if Mr Smith’s Estate were more significant and he left more than 10% of his net Estate to charity, the amount of inheritance tax due on his whole Estate would be reduced accordingly.

The rules on inheritance tax can be complex and it is always key to seek expert advice before updating or amending your Will.

I want to leave money to charity in my Will, what should I do next?

Get in touch with our Wills, Trusts and Probate team. Our specialist solicitors can provide clear advice on the implications of charitable giving, and prepare a Will to ensure your wishes are carried out in future.