Consortium revises down the expected impact of Covid-19 on legacy income

Charities’ legacy income will fall less this year than earlier predictions, latest analysis shows. 

The charity legacy consortium Legacy Foresight said in April that charity legacy income could fall by up to 27 per cent because of administrative difficulties caused by the Covid-19 outbreak.

The consortium then said in June that legacy income, which was worth £3.2bn in 2019, could shrink by between 4 and 23 per cent this year. 

Legacy Foresight has now said that it had updated its projections of the impact of Covid-19 on the UK legacy market and expects that cash legacy income could shrink by between 1 and 15 per cent in 2020, with a central estimate of an 8 per cent fall. 

But it warned that a “high degree of uncertainty” around legacies remained, particularly around the timing and extent of any second peak of the virus. 

“As such, the pessimistic scenario is also a highly plausible outcome,” said Legacy Foresight in a statement. 

It said latest figures showed that the number of bequests for the second quarter of 2020 were significantly lower than anticipated, probably because of ongoing problems in the probate system. 

“While it is likely that charities will continue to see a bounce back in the remainder of the year, a full recovery in notification numbers this year following the probate delays experienced in 2019 is becoming less likely,” said Legacy Foresight.

But it said that legacy income is still expected to grow over the next few years, reaching between £3.5bn and £3.9bn in 2024, a rise of between 4 and 14 per cent over five years. 

Jon Franklin, economist at Legacy Foresight, said: “Our scenarios suggest that legacy income could fall by between 1 and 15 per cent this year, reflecting the worsening economic environment and potential delays in the sale of property assets caused by a slow-moving market. 

“Analysis from the Legacy Monitor showed cash income remained resilient, thanks to legacy administration teams’ speed to adapt during lockdown; this is reflected in our more optimistic outlook for legacy income over the rest of the year.

“As delays unwind and income starts to flow from the anticipated increase in bequests, it is likely that income could rise quite rapidly in 2021 and 2022.”

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