12th September 2019
Could inheritance tax make us more charitable?
With the pending hike in the death tax, supporting charities in your will may be more beneficial than you think
- Leading online will writer Farewill finds that 80% of their customers, who donate money to charity in their wills, pledge on average £24K while the national average stands at £3.3k per person
- 34% of the UK would now consider leaving a legacy donation/leave money to a charity within their will
- Almost 10% of Brits did not realise they could leave money to a charity in their will
Dan Garrett, CEO and Co-founder of Farewill discusses inheritance tax and the benefits of charitable giving in wills
Hi ,
I hope you’re well and this exclusive research is of interest.
As legacy donations to charities exceed £3 billion per year for the first time in 2018, Farewill, the UK’s No.1 will writing service, questions if the death tax is encouraging Brits to be more charitable within their wills. Given that 80% of Farewill customers who leave gifts to charities in their wills pledge a staggering £24,000 on average to the charities of their choosing, Farewill has assessed why Brits have increased their legacy donations from £1.76bn to £3.36bn within a single decade.
Tax advantages of leaving a gift to charity
Leaving a gift to charity in your will can reduce the tax your loved ones pay on what you leave them. Inheritance tax is charged at 40% and applies to the proportion of your estate valued above £325,000 (£650,000 for married couples). Therefore, you can reduce the inheritance tax rate on the remainder of your estate (above £325,000) from 40% to 36%, if you leave at least 10% of your ‘net estate’ to a charity.
Clearly, the advantages of leaving a gift to charities within your will are vast and extend beyond the positive societal impact and legacy you will leave. Given this, why does there remain a £10 billion funding gap which separates how much money Brits say they want to donate compared with how much they actually pledge? Research from Smee & Ford found that in 2017, those who donated to charity in their will pledged 15.6% of their estates. However, if everyone donated 15.6% to charity in their wills, charities would receive a further £9.7 billion in donations.
Farewill’s nationally representative data today unveils how supporting your most loved charities within your will may be the best decision you make.
Key research statistics:
- A quarter of Brits state that if they knew their family was looked after financially, they would donate all/the majority of their money to charity
- 55% of Brits would rather donate money to smaller local charities as they know it will make a positive impact within their communities
- 27% of Brits want to support smaller local charities, but are only aware of the larger charities
- 40% of the UK will only donate money to charities that they or their loved ones have a personal relationship with
- Almost 10% of Brits did not realise they could leave money to a charity in their will
- 34% of the UK would now consider leaving a legacy donation/leave money to a charity within their will
- 24% of Brits want to have more of an impact on society after their death
Dan Garrett, CEO and Co-founder of Farewill is of the following opinion:
‘We’ve been working with charities since we launched, because we believe everyone has a responsibility to encourage and normalise charity gifts in wills - from policy-makers and solicitors, through to us as individuals. Whether you’re leaving a gift to charities who have helped you or your loved ones, support the most vulnerable or stand for something you are passionate about, your donations are worth so much, to so to many. By removing the barriers that stop people leaving a gift to charities in their wills, we have enabled countless individuals get their affairs sorted whilst also doing a good thing and supporting hundreds of charities in the process.’
About Farewill:
Farewill’s mission is to change the way the world deals with death by helping the UK create legally binding wills and probate, quickly, easily and sensitively, from the comfort of their own home. Proudly rated #1 on Trustpilot in the UK, Farewill’s website helps you through a jargon-free step-by-step process to complete your legally binding will or probate online, without the expense or complication of seeing a solicitor in person.
All the best,
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