Leaving a gift to charity in your Will is a wonderful way to create a lasting legacy. It can also provide significant Inheritance Tax benefits for your estate.
If you leave at least 10% of your net estate to charity, the IHT rate on the remainder is reduced from 40% to 36%. While this may sound like a small reduction, it can actually result in your beneficiaries receiving more than if you hadn't made the charitable gift.
For example, on an estate of £500,000 (after the nil-rate band), leaving 10% (£50,000) to charity would reduce the IHT rate from 40% to 36%. The tax on the remaining £450,000 would be £162,000 (at 36%) instead of £200,000 (at 40%) — saving £38,000, with only £50,000 going to charity.
There are different ways to leave a gift to charity. A pecuniary legacy is a fixed sum (e.g., £5,000). A residuary legacy is a share of what's left after other gifts and debts are paid. A specific legacy is a particular item or asset.
In 2026, charitable legacies account for approximately £3.5 billion per year in the UK, making them a vital source of income for charities large and small.
It's important to name the charity correctly in your Will, including the registered charity number, to avoid any confusion. We can help ensure this is done properly.
At Castle Family Legal, we can incorporate charitable gifts into your Will alongside your other wishes. Contact us to discuss how to leave a meaningful legacy.
