Inheritance tax changes could have negative effect on charity legacy income, Remember A Charity warns

The membership body says the measure, announced by Chancellor George Osborne in yesterday's summer Budget, means that charities will have to work harder to promote legacy giving


Changes to the inheritance tax threshold announced in the summer Budget yesterday could have a negative effect on charity legacy income, Remember A Charity has warned.

The membership body, which encourages people to leave gifts to charity in their wills, said the changes announced by George Osborne, the Chancellor of the Exchequer, would mean that charities would have to work harder to promote legacy giving.

From 2017, said Osborne, the government would phase in an additional £175,000 allowance to the existing £325,000 inheritance tax threshold for people who leave their homes to their children or grandchildren.

The additional allowance would be £100,000 in 2017/18, rising by £25,000 a year until it reaches £175,000 by 2020/21.

Osborne said the changes would mean that families could pass up to £1m on to their children free of inheritance tax.

Alex McDowell, chair of Remember A Charity, said: "The legacy marketplace is significant and has far from reached its potential, but the increase in the IHT threshold risks affecting the ability of charities to meet that potential.

"One of the biggest challenges is that professional advisers will not find it as relevant to discuss legacies with so many clients, and their role has been instrumental in increasing the number of people including charities in their wills," he said.

McDowell said that Remember A Charity was calling on the government to introduce additional incentives for people to leave charitable legacies.

Research by Remember A Charity shows that the proportion of solicitors and will writers who prompt clients about leaving charitable gifts in their wills has increased from 53 per cent to 65 per cent over the past four years.

It is concerned that if inheritance tax is an issue only for richer people, legacy giving might end up being seen by advisers as something that should be raised only with the very wealthy.

But Meg Abdy, director of the charity legacy consortium Legacy Foresight, said she did not believe the changes would be as much of a threat to legacy income as they first appeared.

"The general evidence is that people are leaving charitable legacies for genuine philanthropic reasons rather than to avoid the taxman," she said.

She said that about two-thirds of charity legacy income came from childless people who did not have obvious heirs.

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