Around £1.7bn ($2.3bn, €2bn) was donated to charity in the UK in 2018-19 through Wills – the last tax year with available data.
Of this, almost half (£800m) came from 300 high net worth (HNWs) individuals who gifted at least £1m each, leaving charities with an average of approximately £2.7m per donor, analysis by law firm Boodle Hatfield found.
The rest was donated by 9,800 individuals – on average £92,000 each.
Since charitable gits in Wills account for a third of charites’ income, Kyra Motley, partner at Boodle Hatfield, believes the UK government could do more to help.
Currently, HNWs can lower their inheritance tax liabilities from 40% to 36% if at least 10% of their net estate is left to charity.
But Motley believes there should be greater tax incentives for two reasons: to allow wealthy individuals to donate more and offset their IHT bills as a result; as well as make sure charities can receive a higher volume of donations since they make up such a large part of their income.
Other ways of giving
There are alternatives to donations in Wills, however, Boodle Hatfield said.
Lifetime giving to charities qualifies for various tax reliefs such as gift aid – where charities can claim an extra £0.25 per £1 received.
Assets gifted to charities are also capital gains and inheritance tax-exempt “as they are treated as being disposed of at nil value”, the law firm added.
Motley said: “Charities are increasingly seeing gifts in Wills as a growth area of income. The value of residential property held in estates means that many donors are relatively cash poor but asset rich.
“Legacy giving has always been essential for charities, but given the devastating impact of the pandemic on the sector, people may want to think about bringing forward their gifting.
“We would urge people to consider lifetime giving, which is exempt from inheritance tax, and crucially, qualifies donors for gift aid.”
