If you’re thinking about giving to charity, including a donation in your will not only benefits the causes close to your heart, but could also reduce your tax bills at the same time.
Many charities have been hard hit by Coronavirus, which has prevented fundraising events from going ahead, and need our support more than ever. Neil Heslop, chief executive of the Charities Aid Foundation, said: “We know that lockdowns saved lives and protected the NHS, but for the thousands of charities that rely on fundraising events, on spontaneous cash donations and on an army of volunteers, the shuttering of the economy has left a black hole in their finances estimated at more than £10 billion.”
How you can help
This year, September 6 marks the start of Remember a Charity week, which encourages people to consider leaving a gift to charity in their wills. Many charitable organisations rely on these donations to continue their work. According to Remember a Charity, which is part of the Chartered Institute of Fundraising, gifts in wills fund more than half of Marie Curie hospices, one in six children in NSPCC care, a third of Cancer Research UK’s research and six out of every 10 RNLI lifeboat launches.
To leave a charitable gift in your will, you simply need to notify your solicitor or will provider of your wishes when having your will drawn up. If you have an existing will, you can ask your provider to amend it to include your charitable donation. There’s no minimum amount you can leave to charity in your will, so it’s entirely up to you how much you leave.
Tax benefits of making charitable gifts in your will
Giving to charity not only supports the causes that are important to you, but it can help reduce inheritance tax bills.
Under current tax rules, IHT is payable at a rate of 40% on the value of your estate above £325,000. Your estate includes your home if you own one, and everything else you own, such as your car and the home contents.
Any gifts you make to charity are free from inheritance tax, and if you leave more than 10% of your estate to charity, this reduces the total amount of inheritance tax you pay from 40% to 36%.
Other ways to give
There are plenty of other ways to donate to charity if you don’t want to leave a gift in your will.
For example, you may be able to make donations via payroll giving, which involves donating straight from your pay before income tax is deducted. This means that part of your donation is made up of money that would otherwise have gone to the taxman. For example, if you made a donation of £30 a month, the cost to you as a 20% tax rate payer would only be £24, or £18 if you pay tax at 40%. Not all companies offer payroll giving, however, so you’ll need to check with your employer to see if you can donate this way.
More like this
Alternatively, you can make donations through the Gift Aid scheme. Gift Aid was introduced by the Government in 1990 to enable charities to reclaim the income tax on donations received from UK taxpayers.
You will need to fill in a Gift Aid declaration to make Gift Aid possible, but you can usually download one of these from any charity’s website, or ask them to send you a form