3 lovely benefits of donating to charity in your will

It’s not always easy to think about what may happen to your estate after you pass away, but one of the things that can be fulfilling about this process is to consider leaving a gift to charity in your will. Just think of all the people you could help by doing so.

As well as supporting a charity that is close to your heart, so that they can continue to deliver life-enhancing work, your gift can help your family by mitigating a potential Inheritance Tax (IHT) bill on your estate.

Read on to learn more about three lovely benefits of leaving a gift to charity in your will.

1. Support a cause you care about

The most significant benefit of leaving a gift to charity in your will is the difference you can make to a cause you care about. Many charities rely on legacy gifts to fund their life-changing work.

Remember a Charity reports that “gifts in wills are the largest single source of voluntary income for charities in the UK, raising £3.85 billion for good causes annually and funding vital charitable services”.

So, by leaving a financial gift to a charity, you can ensure that your wealth continues to improve or even save lives after you’re gone.

2. Reduce the value of your taxable estate and mitigate a potential Inheritance Tax bill

After you pass away, any portion of your estate that exceeds the nil-rate band may be liable for IHT.

In 2024/25, the nil-rate band is £325,000. The residence nil-rate band, which may apply in addition to the nil-rate band if you are leaving your main home to a direct descendent in your will, is £175,000. If your taxable estate exceeds these thresholds, your family may need to pay IHT on the excess.

Gifts that you leave to charity are immediately considered outside of your estate for IHT purposes.

So, when you leave a gift to a charity in your will, you reduce the value of your taxable estate. Consequently, you may be able to reduce the IHT bill that is due on your estate after you pass away, ensuring that more of your wealth goes towards helping those you care about.

3. Reduce the rate of Inheritance Tax payable on your estate

Another tax benefit of leaving a charitable gift in your will is that you may be able to reduce the rate of IHT payable on your remaining estate.

Ordinarily, your beneficiaries would need to pay IHT on the taxable estate at a rate of 40%. If you leave a minimum of 10% of your estate to a qualifying charity, the rate falls to 36%. This is another way that you can reduce the amount of IHT that may be payable after you pass away.

There are some important factors to consider if you’d like to leave a charitable gift in your will

As you can see, leaving a charitable gift in your will can be a lovely thing to do that benefits you, your chosen charity, and your family. If this is something you would like to do, be sure to consider the following points.

Make sure you leave clear instructions about the gift

As with any estate plan, it’s important that the instructions in your will are clear and easy to follow. Over time, charities might change their name, so it may be helpful to include their registered charity number as well to ensure your money goes to the right place.

You must also specify how much you would like to leave to the charity, and in what form. For example, would you like to leave a lump sum, a percentage of your estate, or specific assets such as art or jewellery?

Remember to consider your financial dependants when writing your will

If you have any family or friends who are financially dependent on you, it’s important to ensure you leave enough in your will to support them after you’re gone. If they believe you have not provided enough for them to support themselves, they could contest your will.

So, make sure your dependants are your first priority, and after you have provided for them, consider how much you may be able to leave to charity in your will.

Remember to update your will regularly, particularly after a big life change

Your will is a living document that you are likely to need to update regularly. In particular, it’s important to review and update it if you:

• Buy or sell property

• Marry or remarry

• Have a child or grandchild

• Separate from your partner.

You can read more about creating a will and other important estate planning documents on our website.

Get in touch

If you’d like to learn more about leaving a charitable gift in your will, please get in touch. Our friendly team of financial planners in Towcester can help you to create an estate plan that provides peace of mind for you and your family about the future.

Email theteam@fortitudefp.co.uk or call us on 01327 354321.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning, or will writing.