Tax Tip: Philanthropy is not just a good deed – it saves you tax!
Beautiful old hands
… And we know this looking at the likes of Bill Gates and Mark Zuckerberg.
By leaving at least 10% of your estate on death to charity, the rate of inheritance tax charged on the balance of your estate is reduced from 40% to 36%. Whilst this appears quite modest, the savings can be significant.
Suppose a person’s estate is valued at £1M and there are no other reliefs available, the inheritance tax (IHT) payable is £400K leaving a net estate of £600K.
If, however, at least 10% of a person’s net estate was left to a qualifying charity, the taxable estate is charged at a lower rate of 36%. In the above example, the IHT payable is reduced to £324K and the net estate is £576K.
So a £100k gift to the charity is made at a cost of just £24k.
Call 0207 600 5667 and ask for the Tax Team should you want any more information on this.
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