New HMRC guidance on reduced IHT rate for charitable gifts
HMRC has just published new guidance which will clarify rules on the reduced rate of inheritance tax for charitable gifts.
As from April 2012, if a deceased’s estate pays out at least a 10% donation to a qualifying charity, the whole estate will then be charged at 36% liability, rather than the usual 40%, if it is valued over £325,000.
It must be bourne in mind however, that there may well be several chargeable elements to an estate. These elements often include assets which the person owns jointly with someone else, assets in trust and assets which they own totally or as tenants in common.
It is possible therefore, that even if a percentage of the estate is left to a qualifying charity, only a portion of the estate is then taxed at the lower rate, with the rest of the assets being charged at the usual, 40% rate.
To find out whether your will is likely to attract the full reduction in liability, you are advised to contact a professional estate planner.