Throughout the course of your estate planning, you may have considered leaving money to charity in your will as a method to support worthy causes while also reducing your Inheritance Tax (IHT) bill.

Making a charitable donation in your will can be a useful way to improve the tax efficiency of your estate, while simultaneously ensuring that you have more say over where your money goes.

Here are three reasons why leaving money to a charity in your will can be useful, as well as a few other points to consider.

1. The government will reduce your IHT rate


Firstly, leaving money to charity can help you to reduce the IHT payable on your estate.

If you leave something to charity in your will, it won’t count towards the total taxable value of your estate, so the value of the gift will not be taxed.

You could also cut the IHT rate on the rest of your estate from 40% to 36% if you leave at least 10% of your “net estate” to a charity. This could significantly reduce your IHT bill, particularly if you have a large estate.

Bear in mind that charities and organisations you leave money to must be based in the UK to receive the tax benefits.

2. Support causes that matter to you


Alongside the tax advantages of making a gift to charity, this is a great way to support the causes that matter to you.  Rather than paying it in tax, you can leave money directly to a charity that means something to you.

As well as charities, there are a range of other organisations that you can leave money to while receiving the associated tax breaks. This could include:


  • Universities
  • Political parties
  • Community sports clubs

You can even play an active role in the legacy of your gift by leaving details in your will as to how you would like the charity or organisation to use your money.

3. You can gift assets as well as cash


When you think of leaving money to charity in your will, you might believe you can only leave a cash lump sum. But did you know that you can also leave assets and valuable items as well?

This could include:


  • Jewellery
  • Antiques
  • Works of art

By leaving assets and valuable goods to charities, this would allow you to reduce the size of your estate and your tax bill, while still retaining any other money or wealth that you want to pass directly to your beneficiaries.

This would also mean that your beneficiaries wouldn’t need to worry about selling assets like this, which can be a drawn out and difficult process.

A few things to consider


Of course, as with any financial decision, there are considerations to make when leaving money to charity in a will.

You must leave “reasonable” provision for financial dependents

The first thing to bear in mind is that no matter how much you want to leave to charitable causes, you must make “reasonable” provision for your financial dependents, such as your children or a surviving spouse or civil partner.

If you don’t do this, your dependents may be entitled to contest your will. Make sure you consider them as your priority when creating your will.

Inflation could reduce the value of a lump sum

Inflation is often talked about in the context of eroding your wealth over time. Unfortunately, if you leave a lump sum to a charity, inflation could mean you end up leaving less to that charity than you had intended.

Imagine that it’s the year 1999 and someone wanted to leave 10% of their £1 million estate to a charity, a total of £100,000. Let’s also assume that they write this into their will 20 years before they die.

According to the Bank of England’s inflation calculator, by 2019 they would needed to have given the charity £174,605 to leave a sum with the same spending power as £100,000 in 1999.

To combat this, you could consider index-linking your gift so that the amount you give is adjusted for inflation. Alternatively, leaving assets rather than cash could also avoid the issue of inflation.

Include the charity number as well as the name

An issue that has affected retirees throughout the years is a frustratingly simple one: charities often change their name and so money left to charity in a will has nowhere to go, or even goes to the wrong charity.

Fortunately, a straightforward fix to this problem is to include the charity’s registered number in your will. That way, there will be no confusion as to where your gift is supposed to go.

Work with us


If you’d like to know more about how leaving money to charity in your will could be an effective part of your estate plan, please get in touch with us at Cordiner Wealth.

Email or call 0113 262 1242 to speak to an experienced adviser.

Please note


The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.