The Inheritance Tax Reduced Rate for Estates Leaving 10% or More to Charity

Effective when a person dies on or after 6th April 2012, in general terms, the new Inheritance Tax rate means that if a deceased person has left 10% or more of his estate to charity, then the tax rate applying to the taxable part of the estate may be reduced from 40% to 36%.

This is part of the Governments plan to promote charitable giving and allows the family or friends to benefit from the generosity of the deceased, as the taxable estate could pay a reduced rate of tax, thus passing a greater share of the estate to charity.

The calculations for arriving at the '10% test' are complex and look at different components of the deceased's estate individually before arriving at the baseline amount to which the 10% test is applied.

If you would like to discuss charitable giving in your Will with one of the experienced members of our Wills and Probate team, or if you are a personal representative of an estate and would like to discuss the tax planning opportunities available, please contact us.

This article is provided for general information purposes only and represents our understanding of the relevant law and practice as at the date of uploading. This article should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.

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