Inheritance tax bills for those leaving 10 per cent or more to charity will be slashed by the same amount, in measures announced in today’s Budget.
From April 2012, the IHT rate will be cut to 36 per cent for those leaving part of their estate to charity, as part of the government’s plan to galvanise a charitable Britain.
George Osborne commented in today’s Budget that this ‘major change’ is to make ‘giving 10 per cent of your legacy to charity the new norm in our country’.
This tax change could mean charities benefit from an extra £300 million each year.
In addition, although the current £325,000 nil-rate IHT band is frozen until April 2015, it will then be indexed against the Consumer Prices Index measure of inflation.
Jonathan Gain, chief executive of Stellar Asset Management, comments that the change is a ‘feel-good measure’. He adds: ‘There’s potential for it to be very attractive, and I think people will give it greater consideration. It will change everybody’s outlook.’
However, he did mention that this year’s Budget is ‘fairly quiet’ from an IHT point of view.
Haroon Rashid, will writer and probate solicitor from Contact Law, comments: 'For those people who take their social responsibilities very seriously, the government's 10 per cent inheritance tax relief for people leaving 10 per cent of their estate to charity will be welcomed.
'However, the problem is, will a 10 per cent inheritance tax relief actually encourage people, who aren't keen charitable givers, to leave money to charities in their wills? The stark reality is probably not,' he adds.
While Rashid says we shouldn't 'look a gift horse in the mouth', it's worth remembering that lots of people are 'burdened with an onerous inheritance tax regime' and would 'remind George Osborne that charity begins at home'.