28/08/2026
Are you part of a charity or considering gifting some of your estate to charity?
Why leave a gift to charity?
Gifts to qualifying charities are free from Inheritance Tax. So, anything left to charity is taken off the value of the estate before IHT is worked out.
There can also be an extra benefit. If someone leaves 10% or more of their taxable estate to charity, the IHT rate on the rest of the taxable estate can reduce from 40% to 36%.
Why is this important now?
From April 2027, pension pots are due to be included when working out the value of an estate for IHT.
This could mean that some families who have not previously had to think about IHT may now find themselves liable for it, particularly where they have a valuable home, savings and pensions.
The current basic IHT allowance is £325,000 per person.
For married couples and civil partners, unused allowances can usually be passed to the surviving partner. There is also an additional £175,000 allowance where a qualifying home is passed to children or other direct descendants.
This means a couple could potentially have up to £1 million of allowances available, depending on their circumstances.
Why this could be helpful for families
A gift to charity can therefore do two things:
• Support a cause they care about
• Potentially reduce the amount of Inheritance Tax their family has to pay
A charitable gift doesn't necessarily mean the family receives less overall – in some circumstances, it can actually reduce the tax bill as well as providing valuable support to the charity.
Of course, everyone's circumstances are different, so anyone considering this should take appropriate legal or tax advice.
