HNWs increasingly making £1m+ charitable gifts in Wills
The number of high net worth individuals (HNWIs) gifting over £1 million to charities upon their death is increased by 31 percent in 2017/18 – the most recently available data from HMRC.
According to UK law firm Boodle Hatfield, the number of transfers to charities on death worth over £1 million increased to 3,043 from 2,328 the previous year.
Gifts in wills account for around a third of a charity’s voluntary income, which includes donations and grants.
There is currently an estimated £10.1 billion funding shortfall within the charity sector due to Covid-19.
HNWIs who are looking to pass on their estates to charities in their Will, may find lifetime giving to be more beneficial, particularly during the pandemic, the law firm suggested.
Lifetime giving to charities qualifies donors for various tax reliefs, such as Gift Aid. Gifts are also exempt from Inheritance Tax (IHT), while assets gifted to charities accrue no Capital Gains Tax, as they are treated as being disposed of at nil value.
For those gifting to charities in their Will, the IHT rate on their remaining estate falls from 40 percent to 36 percent if at least 10 percent of their net estate is left to charity.
Eleanor Sepanski, Partner at Boodle Hatfield, said: “The hope of many charities is that continued donations from HNWs make up for any fall in donations from the broader population.”
“Charitable giving upon death offers a huge financial boost for many charities. However, HNWs should consider switching to lifetime giving rather than waiting to donate a lump sum to charities upon death – particularly as the sector urgently needs help.
5 November 2020
This article first appeared in The Daily Telegraph and eprivateclient in November 2020.