The total value of gifts left to charity in people’s Wills rose to £980m last year, partly as a result of testators seeking to cut their Inheritance Tax (IHT) bills, says TWM Solicitors, a leading private wealth and family law firm.
This is up from £960m of gifts left to charity the previous year — a sign that more people are recognising both the charitable and financial benefits of giving to charity in their Will. While donations are often made for philanthropic reasons, gifts to registered UK charities are also exempt from IHT, offering a tax-efficient way to support good causes.
With a growing number of estates now liable for IHT due to frozen thresholds not keeping step with inflation, more people are using charitable donations to help reduce their IHT liabilities. This can ensure more of their wealth goes to causes they care about – rather than to the taxman. Estates that donate 10% or more of their net value to charity benefit from a reduced 36% IHT rate being applied to the rest of the assets, down from the standard 40%.
TWM Solicitors says it expects that any rumoured IHT-related crackdown on gifting by Rachel Reeves will exclude changes to the rules around charitable giving.
The upward trend in the value of gifts left in Wills is expected to continue, as recent Budget changes bring pensions into the IHT net from 6 April 2027, significantly increasing tax exposure for higher value estates.
Laura Walkley, Partner and Head of Private Client at TWM Solicitors, says: “Donors gave close to a billion pounds to charity in their Wills last year – a sign that gifting is increasingly being used as a smart estate-planning tool.”
“Leaving a gift in a Will reduces the size of the estate which is subject to IHT – thus reducing the tax liabilities. Crucially, if the gift is large enough, then the remaining estate may qualify for a reduced inheritance tax rate.”
“There are many high earners who either have no heirs or whose heirs are already wealthy. Instead of leaving their estate to family who may not need the money, many of these individuals are choosing to leave more to charities that they support.”
“The growing complexity of estate planning means it’s more important than ever for families to seek professional advice. That way they can understand the full range of options available to them.”
