Inheritance Tax Guide
Your solicitor will be able to advise you in more detail about about inheritance tax (IHT) and more importantly, they can tailor their advice to your personal circumstances. However, here is a brief overview which you may find helpful.
What is Inheritance Tax?
Inheritance Tax (IHT) is a tax on an Estate (money, property and possessions) after a person has died. Generally there is no inheritance tax to pay if the value of your Estate is below the threshold (currently £325,000) or you leave everything to your spouse or civil partner, a community amateur sports club or a charity, such as Adventure Therapy.
The 10% IHT charity relief
As part of the Legacy10 Campaign, which has been launched to encourage charitable giving in the UK, HMRC will reduce the level of inheritance tax against an Estate if 10% or more is left to a charitable organisation in a Will. This reduces the IHT burden from 40% to 36%.
If your Estate is worth over £325,000 this would enable you to leave a gift to Adventure Therapy in your Will whilst reducing the rate of IHT payable, which could have a positive impact to the non-charity beneficiaries of your Estate. In certain circumstances you can use this to leave a gift to charity at no cost to the other beneficiaries of the Will.
Things to consider
Use of the 10% reduced rate of IHT is a technical provision and the calculation can be complex. Therefore we recommend that you speak with a solicitor if you are considering utilising this provision.
Changes to the IHT allowance or the overall value of your Estate could make a considerable difference to the amount of tax on your assets and tax rules do change, so be sure to review your Will frequently. It is also worth seeking professional advice from a solicitor, accountant or financial advisor before making any decisions.
Please note that the rules are different if you die intestate (without a valid Will in place).