The value of gifts over £1m made to charity in wills has increased by 33% to £1.1bn from £850m in the last year, says private wealth and family law firm, TWM Solicitors.
Donations worth over £1m to charities represent 54% of the £2.1bn that was left to charity in wills last year.
TWM says this rise in money given to charities through wills is driven in part by people looking to reduce the estates’ inheritance tax (IHT) liability. Gifts to UK charities are exempt from IHT.
In addition, people who leave more than 10% of their total value of their estates to charity benefit from a lower IHT rate of 36% applied to the remainder of their estates, compared to the standard 40% tax charge. People also make these donations for philanthropic reasons, as individuals look to make contributions to causes that are dear to them.
Laura Walkley, Deputy Head of Private Client at TWM, says that giving money to charity through a will is likely to become even more common now that pensions have been brought into the IHT net in the recent Budget.
“There are many high earners or high net worth individuals who either have no children, or have children and wider families who are already financially self-sufficient. Instead of (or as well as) passing all of their wealth to their relatives, those people choose to leave money to causes that are close to their hearts.”
“We have seen a wide variety of charities benefitting from these large gifts, from major national organisations like the RSPCA to small local charities.”
“The rules about gifting to charities in a will can be complicated, and it is important that wills are drafted correctly in order for the full benefit to be available. Simple errors can end up with the intended tax benefit not being achieved.”
£1million pound donations to charity through wills reach record high in the last year
*Source: HMRC, 2021-22 (year end March 31), the most recent figures on record.
