Jack­son Bar­rett and Gass are talk­ing part in the East Cheshire Hos­pice Will Week. Through­out the week begin­ning 6th Octo­ber 2014, Jack­son Bar­rett and Gass will waive their fee for reg­u­lar Wills in return for clients mak­ing a con­tri­bu­tion to the Hospice.

When con­sid­er­ing leav­ing a Lega­cy to char­i­ty, a recent Inher­i­tance Tax rules change makes it now pos­si­ble to;

1) Pay less Inher­i­tance Tax
2) Give more mon­ey to charity
3) Give more mon­ey to loved ones

Inher­i­tance Tax changes usu­al­ly involve clos­ing exist­ing loop­holes in order to max­imise HMRC rev­enue, for exam­ple, clos­ing the loop­hole that allowed par­ents to give their prop­er­ty to their chil­dren and avoid pay­ing Inher­i­tance Tax (if they sur­vived for 7 years or more after mak­ing the gift). How­ev­er, in return for clos­ing exist­ing loop­holes, HMRC decid­ed to reduce the Inher­i­tance Tax rate to 36%*.

How­ev­er, in order to qual­i­fy for the reduced rate, a per­son must leave at least 10% of their net Estate (amount left after exemp­tions and allowances) to charity.

If a per­son has an Estate worth £500,000** and they decide to leave between 4% and 9% of their net Estate to char­i­ty, it would be ben­e­fi­cial to increase the amount pass­ing to char­i­ty to 10%. This is because the tax rate is reduced to 36% if more than 10% of the net Estate is left to char­i­ty. This reduc­tion off­sets the extra amount giv­en to char­i­ty and means more mon­ey is avail­able for the oth­er beneficiaries.

An exam­ple is giv­en below and shows how dou­bling the amount giv­en to char­i­ty (e.g. East Cheshire Hos­pice) can result in more mon­ey being giv­en to a person’s loved ones (in this case, their children).

Gift to East Cheshire Hos­pice £25,000 (5%)
Gift to Chil­dren £285,000
Inher­i­tance Tax at 40% £190,000
Total £500,000

Gift to East Cheshire Hos­pice £50,000 (10%)
Gift to Chil­dren £288,000
Inher­i­tance Tax at 36% £162,000
Total £500,000

* If more than 10% of the net Estate is left to charity
** This fig­ure does not include the Nil Rate Band (tax free allowance) that is avail­able to most people.

Gifts to char­i­ties are com­plete­ly exempt from Inher­i­tance Tax. There­fore, when you are think­ing about mak­ing a Will and con­sid­er­ing how much to leave to char­i­ty; remem­ber, it may be pos­si­ble to give more to your loved ones by giv­ing more to charity.

Fiona Beasley, Lega­cy Mar­ket­ing Man­ag­er, said Gifts from Wills are so impor­tant to the Hos­pice and are a major ele­ment of the vol­un­tary income we receive. It is good to know that peo­ple good enough to think of us in this way can also enjoy tax effi­cient benefits.”

Wills & Pro­bate spe­cial­ist, Paul Clark, said This is a very effec­tive way of reduc­ing Inher­i­tance Tax and should be con­sid­ered by peo­ple wish­ing to ben­e­fit a char­i­ty whilst max­imis­ing the funds avail­able to oth­er ben­e­fi­cia­ries. Despite its com­plex­i­ties, it is a great weapon to have in the Estate plan­ning arsenal.”

For more infor­ma­tion about the East Cheshire Hos­pice & Will Week, vis­it www​.eastcheshire​hos​pice​.org​.uk/​w​i​l​lweek or con­tact 01625 666991.