How a £100,000 gift costs just £24,000
Even if you can’t manage to give away much of your hard-earned cash in your lifetime, leaving a substantial donation to charity in a will at your last hour will have a huge impact.
As Mark Greer, managing director of philanthropy services at the Charities Aid Foundation, points out: “For many donors, a gift to a UK charity is free from IHT.” He explains that the money is ‘removed’ from the value of a donor’s estate before tax is calculated.
He says: “In addition to the donation being tax free, charitable gifts can reduce the amount of IHT paid on the rest of the estate. If 10 per cent or more of the estate is gifted to charity, then the rate of IHT paid on the rest of the estate is reduced from 40 per cent to 36 per cent."
He enthuses with an example: “A £100,000 gift to charity from a £1m estate only ‘costs’ the beneficiaries £24,000.”
Stephanie Hawthorne is a freelance journalist
