According to Remember A Charity, one in five charity donors (21%) aged 40 and over leave a gift for charity in the will, known as a legacy, and now makes up approximately 30% of all donations received by charities.
Leaving a legacy has become more popular, as around 100 people choose to leave a legacy in their will every day.
There are many reasons why someone would want to do this. The obvious being to support a cause that you are passionate about, usually with a much larger sum than they’d be able to commit to while they were alive, creating a greater impact and ‘legacy’.
According to Remember A Charity, legacy gifts fund more than half of Marie Curie’s hospices, fund one in six children in NSPCC care, a third of the research for Cancer Research UK and almost two-thirds of RNLI’s lifeboat launches.
Many people also leave a gift to charities that were important to loved ones, as a way of keeping their memory alive.
There is also a tax incentive in leaving a legacy as well. Gifts to charities are exempt from inheritance tax, and as such testators are able to reduce the size of their taxable estate by leaving a legacy.
Say the net value of your estate is estimated at £335,000 (£10,000 over the inheritance tax threshold). This would normally incur a £4,000 tax bill. Leaving a £10,000 legacy to charity in your will would reset the net value of your estate to £325,000, meaning no tax bill whatsoever. This means that your £10,000 contribution has really cost £6,000.
There is also a provision where gifting 10% of your estate to charity brings down your inheritance tax rate to 36%.
If you have an estate worth £400,000 – that’s £75,000 over the threshold and a £30,000 tax bill. Should you give £40,000 as a legacy gift to charity, that not only reduces your estate to £360,000 which would normally cut your tax bill to £14,000; but with the reduced tax rate of 36%, that would make the tax bill £12,600 – saving an extra £1,400.
How to leave a gift in your will
To leave a legacy in your will, be sure to mention this to your will writing professional – outlining the amount and which organisation you would like to leave a gift to.
There are usually incentives run by charities and organisations to encourage gifts in wills such as National Wills Month in March and October, or potentially other times of the year with agreements with law firms and their chosen charity partners.
Remember A Charity Week
We’re proud to be a Charity Champion with ‘Remember A Charity In Your Will Week’ between 9-15 September, raising awareness to the importance of leaving a legacy in your will to help power the organisations that impact communities and society in so many meaningful ways. Find out more by logging on to their website: https://www.rememberacharity.org.uk/about-us/remember-a-charity-week/