Leaving a Legacy in Your Will

Once you have provided for your family and friends, leaving us a gift in your will means we can continue to make a difference to the lives of the people we support. Anyone can leave any gift in their will, making an invaluable difference to our services. It is easy to write a will or to add a codicil to an existing will. MCS-Aware is a registered charity no. 1152139.

Any donation or gift to a charity in your lifetime, or via your will, could benefit from being exempt from inheritance tax, so reducing the total amount of tax your estate would then attract.

In April 2012, the UK government launched its ‘Legacy 10’ scheme, which further increases the benefits of donating to charity for peoples whose estates (made up of assets such as your house, land, money in the bank, possessions etc) is worth more than £325,000 (and so over the nil rate band threshold to attract inheritance tax). Legacy 10 states that any gift by will to charities that in combination totals at least 10 per cent of your estate (after the £325,000 threshold had been deducted), means you would benefit by paying a reduced rate of inheritance tax at 36 per cent, rather than the current rate of 40%.

The scheme is designed to encourage donations to charity by everyday people. The legacy 10 scheme will mean keeping in place these inheritance tax changes until at least 2020 and encourages the top companies in Britain to provide their staff with financial assistance and advice on making charitable donations in their wills and prompts government and charities to train future legacy fundraisers. Mr Rudd, founder of the RLF Finsbury financial public relations group said, “We hope to radically change the culture of legacy giving in Britain.”

To see if your estate qualifies for the Legacy 10 relief, and how much in inheritance tax you could save, HMRC has a ‘reduced rate’ calculator to work it out for you at: http://www.hmrc.gov.uk/tools/iht-reduced-rate/index.htm
To avoid having to continually re-write your will or readjust your tax planning to enable you to qualify for the relief, I.e. by the donation being over the 10 per cent rate, in relation to future changes to the nil rate band, HMRC has also a modal clause to insert into a will to ensure the relevant criteria is satisfied (even if the amount of your estate fluctuates) at: http://www.hmrc.gov.uk/manuals/ihtmanual/ihtm45008.htm
Further general guidance on the Legacy 10 scheme and how you could benefit can be found at the HMRC website at:  http://www.hmrc.gov.uk/inheritancetax/pass-money-property/charity-reduce.htm

Please note that the above summary is for information purposes only. For more detailed advice about personal estate and tax planning, and before taking any specific action, please consult a legal/financial advisor and consider asking about the ‘Legacy 10’ scheme if/when making a new will or undertaking general tax planning.

Please note that even if an estate is not large enough to attract inheritance tax, all donations to charity are currently exempt from income tax, which can be claimed back via the ‘Gift Aid’ scheme.