Public consultation closed on 8 June, and Remember A Charity has now published its consultation submission. Its response highlights the importance of legacy income and inheritance tax (IHT) relief to charities, with legacy income the largest single source of voluntary income to the sector, generating over £3 billion each year. Current tax relief rules means that any legacy gift to charity is currently exempt from IHT (charged at 40%) and a lower rate of tax (36%) is applicable on estates where 10% or more is donated.
Its response is supported by the Institute of Fundraising and the National Council for Voluntary Organisations and includes three recommendations:
- That any review of IHT and attempts to ‘simplify’ the system should take into account the impact on charitable gifts in wills, and avoid any potential negative consequences
- That any possibilities of simplification that could help to achieve the shared civil society and Government objective of increasing gifts in wills are sought and taken forward wherever possible (for example by considering introducing a tax incentive for everyone who leaves a charitable gift)
- That this review around any potential changes to IHT fully take into consideration the future work of the Charity Tax Commission (established by NCVO to undertake a full review of the charity tax system)
Rob Cope, Director of Remember A Charity, said:
“Tax relief should not be considered purely as a saving for the consumer or a cost to government, but as an opportunity to make a real difference to society for generations to come. The current inheritance tax framework encourages legacy giving and normalises conversation around what can still be seen by some as a taboo topic.
“While IHT may need review, it is essential that any changes will continue to support and encourage gifts in wills. This could be a vital next step towards making the UK the first country in the world where legacy giving is the social norm.”
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