Gifts in Wills

Gifts to charity in your will are free of Inheritance Tax, and if you leave at least 10% of the net value of your estate to charity, the estate can pay Inheritance Tax at a reduced rate of 36% on some assets instead of the standard 40%.

Charity gifts and the tax rule

A charitable gift is taken off the value of your estate before Inheritance Tax is calculated. GOV.UK states that the exemption covers gifts to a charity or a community amateur sports club, and that there is normally no Inheritance Tax to pay on anything above the tax-free threshold that you leave to a spouse, civil partner, charity or community amateur sports club.

The reduced rate is a separate reward for giving a larger share. It applies where 10% or more of the "net value" is left to charity, the net value being the estate's total value minus any debts, and it can be used where the death was on or after 6 April 2012. The exact test is technical, because HMRC applies it to separate parts ("components") of the estate and measures each against a "baseline amount" rather than the headline value, so HMRC offers an Inheritance Tax reduced rate calculator for people preparing their own will and for executors. These tax exemptions and reductions can be significant depending on the size of an estate, but the result depends on the value and structure of the gifts.

What must be included in your will

GOV.UK describes three ways to give:

• A fixed amount of money, known as a pecuniary legacy
• An item, such as property, shares or a possession, known as a specific legacy
• What's left after other gifts, debts and taxes have been paid, known as a residuary legacy

Include the charity's full name. Check it with the charity, or search the charity register in England and Wales, Scotland or Northern Ireland; adding the registered charity number helps the executors identify the right organisation. For the will to be valid in England and Wales, you must be 18 or over, make it voluntarily, be of sound mind, make it in writing, and sign it in the presence of two witnesses over 18, who then sign it in your presence. Scotland and Northern Ireland have different rules.

Getting the gift right

You cannot amend a will once it has been signed and witnessed. To add or change a charity gift, make an official alteration called a codicil, signed and witnessed in the same way as the will, or, for major changes, make a new will that revokes all previous wills and codicils. Review your will every five years and after any major change in your life; getting married cancels any will made before.

Getting professional support from a solicitor or will writer is sensible when a will is not straightforward, for example with property overseas, a business, or family members who may make a claim. Some charities run or promote free will-writing schemes; whichever route you choose, make sure the gift is worded clearly and the estate is valued correctly so the 10% condition can be tested.

Many charities have information to help you structure a gift in your will, and you can let the charity know about your intended gift if you wish. For the tax side, start with the GOV.UK guidance on Inheritance Tax and the reduced rate calculator.