A "no-deal" or "hard" Brexit could result in charities losing out on £1.2bn in legacy income over the next five years, the charity legacy consortium Legacy Foresight has warned.
In its 2018 Legacy Market Review, published today, Legacy Foresight estimates that legacy income for the sector would be £15.8bn over the next five years if Brexit negotiations went to plan.
But if a deal between the UK and the EU was not reached – or a far more onerous deal agreed than that currently proposed by the UK government – the figure would be an estimated £14.6bn over the same period, according to the report.
The report says that this would happen because of a likely significant fall in UK equity and property prices, which would have a knock-on effect on the value of estates and therefore residual values.
Even if a deal is agreed with the EU, Legacy Foresight warns, recent growth rates in legacy income would more than halve, from 5.6 per cent per annum to 2.4 per cent.
Once inflation is factored in, this means that legacy income would grow by only 1 per cent a year post-Brexit, the report says.
It adds, however, that the number of charitable bequests is likely to increase over the next few years because of an increase in the UK’s death rate.
It estimates that the number of deaths a year is likely to rise from 606,000 in 2017 to 628,000 by 2026 and then 708,000 in 2036.
This means a significant increase in deaths over the next 10 years from the 551,000 recorded in 2011, but below the more than 640,000 deaths that were recorded in 1995.
Gifts in wills account for 6 per cent of the charity sector’s total income and 15 per cent of all fundraised income, according to the report.
It says that 291,000 grants in probate were issued in 2017, with 15 per cent of these being intestate.
And 15 per cent of wills at probate included charitable bequests, the report says.
Rob Cope, director of Remember A Charity, said in a statement: "Gifts in wills are the largest source of all voluntary income, and it’s by no means just the largest or long-established charities that are on the receiving end.
"Growth is seen across the sector, and this is testament both to the public’s appetite for leaving lasting gifts and to the hard work and collaboration of fundraisers.
"While Brexit and wider economic uncertainty may indeed have an impact on future legacy trends, the outlook remains positive, with more and more charities benefiting from gifts in wills."