Tax Relief on Charitable Donations

There’s an increasing emphasis on ‘wealth for good’ amongst those fortunate enough to have the means and the desire to support good causes. You may already know which charity or organisation you want to benefit or perhaps you need help deciding, in which case we can suggest how to choose based on an organisation’s Ethical, Social and Governance (ESG) criteria or through other research. 

Equally important, we’ll also advise on tax relief on charitable donations, both to ensure your chosen charity can realise the maximum benefits from your generosity and so you can also benefit from the tax advantages designed to encourage giving. These relate to the tax relief you can claim during your lifetime and by making charitable legacy provisions in your Will to mitigate Inheritance Tax for your family. 

As part of our Inheritance Tax (IHT) planning service, we’ll work alongside your legal advisor to provide guidance on how best to draft your Will to leave a legacy to charity, giving you assurance that your nominated charity will benefit at the same time as mitigating your family’s exposure to tax on your death.  

The amount of your donation will be deducted from your estate before IHT is calculated, reducing the amount of IHT payable. If your legacy leaves at least 10% of your net estate to charity, this lowers the IHT rate and further reduces the tax bill. However, it’s worth bearing in mind that your donation will also reduce the remaining value of your estate, so whilst less money will be taken by HMRC, there will be less to distribute to your beneficiaries.