Treasury in talks to provide tax breaks on property gifts

The move would help to boost 'lifetime legacies', which allow donors to give property to charities after they die

HM Treasury
HM Treasury

The Treasury is in talks with voluntary sector bodies over offering tax breaks for US-style "lifetime legacies", which allow a donor to give property to a charity but retain use of it during their lifetime.

Any such donation to a charity does not currently attract a tax break unless the charity receives the full benefit of the gift immediately.

However, a Treasury spokesman said officials have been in discussions with third sector representatives about whether it was possible to develop a model known as the charitable remainder trust. This would allow a donor to make a legally binding commitment to give their property to charity, while attracting the same tax benefits as a legacy.

The European Association for Philanthropy and Giving and the Charity Tax Group are working together to produce proposals for legislation that would allow development of the new trust, said Simon Weil, chair of the EAPG and a partner at charity law firm Bircham Dyson Bell.

He said the groups would approach the Treasury with proposals in the next two months. Lifetime legacies offered charities more certainty of legacy income and were less subject to legal challenges than legacies left in wills, he said.

"The lifetime legacy is a widely used structure in the US, but previous efforts to introduce it here have been unsuccessful," he said. "We think this is because previously we've tried to do too much. This time, we're looking at introducing tightly structured proposals focused on the charitable remainder trust."

Weil said the trust would not only need a change in policy but would require new legislation.


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