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Donating to charity through a Will

Written by: Fraser Symon
Category: Private Client
16 May 2022

Charitable Giving

All of the major charities in the UK benefit from people who donate through a Will. So much so that most large charitable organisations actively broadcast messages about leaving a gift to charity in a Will.

There are underlying tax benefits should you decide to leave a charitable donation when you make a Will.

How do you make a charitable donation in a Will?

There are really three ways you can donate to charity through a Will. These all involve creating a legacy within your Will.

  • The first of these is a pecuniary legacy. This is where you direct that a specific sum of money or a percentage of your estate be paid over to a named charity.
  • The second is a specific legacy. This is where you leave a specific asset to a named charity, this might be shares or a property from which the charity would benefit.
  • The third type of legacy is a residuary legacy. This is where the remainder of the whole estate is left to a named charity after any other specific legacies or bequests have been made over to others.

You should also be aware that it is most important to ensure that the charity is properly identified. Please check the exact name of the charity and its registered address. Including the charity’s registration number is an excellent way to ensure that the charity has been correctly identified.

In addition, you should make provision for what should happen if the nominated charity no longer exists at the time of your death. For instance, you may instruct that the donation be made to the charity’s successor if, for instance, it has merged with another charity or made over to another charity with similar aims and purposes. You should allow your executor the discretion to choose should your nominated charity no longer exist. By allowing this level of flexibility you will avoid a dispute over the validity of the legacy.

You should also be aware that you can leave donations or mix the types of donations you make to multiple charities – you are not restricted to making a donation to a single charity. You can also make a donation to a Community Amateur Sports Club (CASC) in addition to or instead of a charity.

Are there any other benefits of making a charitable donation?

When you make a donation in a Will to a charity or CASC, should your estate be over the Inheritance Tax (IHT) threshold of £325,000, then any donation you make will be deducted from the amount of your estate on which IHT is calculated, before that calculation takes place. This can be very important if your estate is slightly more than £325,000 and all of the available allowances have been exhausted given that IHT is charged on the balance of the estate over £325,000 at 40%.

You should also be aware that if you donate at least 10% of your estate to a charity or CASC, any IHT you pay is reduced from 40% to 36%. This can amount to a very significant reduction in tax, depending on the size of the estate.

Are there any other schemes available?

You may also wish to consider using Gift Aid to boost the amount of your donation. By employing gift aid, for every £1 you donate, the charity or CASC will gain 25p. Once you have made your donation, the charity or CASC can lodge a Gift Aid claim with the Government. By allowing Gift Aid, you can increase the amount the charity or CASC receives without having to donate more cash to them.

To ensure that your donation carries the benefit of Gift Aid, you should complete a Gift Aid form. The form for charitable donations can be found here. The form for donations to a CASC can be found here.

If you would like to discuss leaving a donation to charity or a community amateur sports club in a Will, please contact us.

Written by:

Fraser Symon

Partner
After completing both primary and secondary school in North Berwick, Fraser studied at the University of Stirling where he obtained a degree in Business Law. Thereafter Fraser studied at the University of Dundee where Fraser obtained his Law Degree and Diploma in Legal Practice. Fraser is a keen sportsman and would list golf, football, skiing, squash and swimming as his favourites. When attending University in Dundee he was granted a golf scholarship and also obtained a University Colour in that activity.

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