Remember A Charity calls on Government to consider impact of abolishing IHT on legacy giving
Melanie May | 28 July 2023 | News
With MPs seeking to abolish Inheritance Tax, Remember A Charity is calling on the Government to consider the impact doing so could have on legacy giving.
Over 50 MPs have called for Inheritance Tax (IHT) to be abolished, with the Government reportedly considering including the proposal in the Conservative manifesto. However, with the current IHT framework incentivising legacy giving, Remember A Charity wants government and policymakers to consult with the sector and ensure that legacy income will be protected.
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Lucinda Frostick, Director of Remember A Charity, said:
“Any change to Inheritance Tax that fails to consider the likely impact on legacy giving and just how vital this income stream is for UK charities would be of great concern to us at Remember A Charity.
“Legacy giving has become a lifeline for thousands of charities and community-based organisations, building resilience and long-term income that has proved crucial in the current economic climate.
“As a representative body for 200 charities that rely on legacy income, we will be urging government and policymakers to consult with us and the wider sector to explore the likely impact on charities of proposed changes, ensuing that legacy income will be protected.”
IHT explained
Gifts to charities in Wills are exempt from inheritance tax, and if someone gives more than 10% of their estate to charity, they benefit from a discounted inheritance tax rate of 36% across the remainder of their estate.
IHT impacts less than 4% of deaths, but estates paying IHT account for around one quarter of all charitable estates and half of legacy income donated. Over a third (36%) of estates above the threshold include a charitable gift and one in four of those charitable estates include donations of 10% or more, so qualifying for the reduced IHT rate.
Legacy giving is also around six times more prevalent for IHT estates – 36% vs 6%, according to figures from HMRC and Smee & Ford.
Remember A Charity is working with the Chartered Institute of Fundraising and other sector bodies to build up evidence on the importance of the IHT incentive and to develop a collaborative response to the Government.
About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.