Like numerous business sectors, not-for-profit organisations such as trusts and charities have been hit hard by the pandemic. It is estimated that many of these non-profits will require increased aid the coming years to bolster their lost revenues.
Now, savers looking to reduce the size of the inheritance tax bills they leave behind for their loved ones are exploring the advantages of leaving a portion of their estate to charity, with HMRC reporting an increase in charitable donations.
Those who benefit from financial advice in Chester, Manchester and other UK cities will find that the cost of inheritance tax can often by offset if not sidestepped entirely with efficient estate planning. By bequeathing part of their final estate to a charity of their choice, people can potentially shave thousands of their inheritance tax bill.
This approach is called a charitable legacy and can effectively cut the inheritance tax charged on an estate’s remainder by as much as 36%, providing 10% or more of the estate is given to charities.
This year, the charitable sector is estimated to have suffered a shortfall of approximately £10.1bn, although recently revealed data collected and released by HMRC indicates gifts exceeding £1m to charity organisations when a person dies have risen by 31% over the past year.
By gifting funds to charity on death, savers have the potential to reducing tax bills for those they leave behind, while at the same time assisting other in need.
