Inheritance tax relief likely to require new standard clause in wills

The 10 per cent reduction in inheritance tax for those leaving at least 10 per cent of their estates to charity will probably lead to a new standard wills clause, says HM Revenue & Customs

HM Revenue & Customs
HM Revenue & Customs

A standard clause is likely to be needed for the wills of people who want to take advantage of the planned inheritance tax break for charitable giving, according to HM Revenue & Customs.

Richard Kent, a senior tax policy adviser at HMRC, talked yesterday to delegates at an event on stimulating philanthropy, organised by the Society of Trust and Estate Practitioners. His topic was the planned 10 per cent reduction in inheritance tax for people who leave at least 10 per cent of their estates to charity.

The initiative was announced in the Budget in March and is due to be introduced in April 2012. The Treasury's consultation on the measure runs until 31 August.

Kent said a standard clause might be needed because the value of an estate fluctuated between the will being written and the person dying. There might also be uncertainty over how the overall value of the estate would be calculated, he said.

"If this is going to work, the expectation is that it's going to require some kind of formulaic clause people can insert into wills so that they can be confident their estate will benefit from the reduced rate," he said.

Owen Clutton, a member of the technical committee of the Society of Trust and Estate Practitioners, which is putting together a response to the Treasury's consultation, presented a draft clause at the event.

The draft clause says: "I give to [name of charity] such assets to be selected by my executors which are not the subject of a specific gift and which shall have a net value for the purposes of inheritance tax equal to 10 (or insert larger figure) per cent (%) of my net estate as defined in section [ ] Inheritance Tax Act 1984 and my executors may appropriate assets to satisfy (or partly satisfy) this legacy without the consent of any beneficiary under my will or codicil."

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