Charity donations soar as thousands dodge inheritance tax
All gifts to charitable causes are tax free. However, someone can cut the inheritance tax rate paid by their estate by donating more than a tenth of your worldly possessions to charity. This discounts the typical 40pc rate to 36pc on assets over the £325,000 tax-free threshold.
As an example, if your taxable estate is worth £250,000, you would be faced with an IHT bill of £100,000, leaving your family with £150,000. By giving away 10pc – £25,000 – to a registered charity, the tax bill would drop to £81,000, leaving your family with £144,000 following the donation. Although heirs lose £6,000, the charity is £25,000 better off.
What’s a “dodge” about obeying the tax law?