Proposed inheritance tax relief 'likely to mean more charity legacies'

Society of Trust and Estate Practitioners makes prediction as government launches consultation on reducing the tax rate for those who leave more than 10 per cent to charity

Legacy giving
Legacy giving

If a planned tax relief on legacies was adopted, nearly all estates advisers would be likely to suggest that their clients think about leaving legacies, according to the chief executive of the umbrella body for specialist legacy advisers.

The Treasury launched a consultation on Friday about the relief, which would reduce inheritance tax to 36 per cent from 40 per cent for those leaving 10 per cent or more of their estates to charity. The Chancellor said in the Budget the change would come into force in April 2012.

David Harvey, chief executive of the Society of Trust and Estate Practitioners, said: "At present, only a third of advisers bring up the question of charitable giving when drafting wills, but we think this new policy has the potential to increase that figure to nearly 100 per cent.

"This has the opportunity to significantly increase charitable giving."

Rob Cope, director of Remember A Charity, which encourages more people to leave charitable legacies, said only a few thousand people each year would be affected directly by the tax reliefs. However, the increased awareness it would create among donors, solicitors and will writers would be enormously valuable, he said.

According to Cope, the consultation made it clear that the proposed tax relief was more generous to donors than originally appeared.

Instead of having to leave 10 per cent of their whole estates to charities for the relief to take effect, donors would need to leave only 10 per cent of the taxable amount, which excludes the first £375,000 and some exempt items.

Cope said an issue that needed clarification was how donors would know their estates qualified for the relief.

"With gifts of things like property and shares, which vary in value, how can you be sure you’re giving 10 per cent?" he said.

The consultation closes on 31 August. A spokesman for HMRC said there would be legislation to implement the proposed change in time for April next year.

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