Law firm sees early interest in proposed inheritance tax break on legacies

Fundraising | Vibeka Mair | 9 Dec 2011

Law firm Kingsley Napley has said clients are already expressing interest in the proposed new tax incentive on charitable legacies which will provide a lower rate of inheritance tax when leaving ten per cent of an estate to charity.

This week, HMRC has published a summary of response to its plans around charitable legacies and inheritance tax. As part of the Finance Bill from April 2012 any legator who bequeathes at least 10 per cent of the value of their estate to a charitable or cultural cause will enjoy a reduction in inheritance tax, from 40 per cent to 36 per cent.

However, some have criticised the plans, saying is too complex and won’t make a difference to people’s charitable giving.

But Matthew Duncan, head of private client at Kingsley Napley, said he has already had clients inquire about the new rules. And many don’t fit the typical legator profile:

“It includes people who haven’t indulged in charitable giving before such as young City professionals making a will for the first time,” he said. “And not just landed families who always planned to give to charity anyway.”

As a result of the consultation, which attracted responses from charities who count a large bulk of their income as legacies such as Cancer Research UK and the National Trust, HMRC will consider suggestions made about minimising administrative burdens when drafting new guidance.

It will also make the entitlement to the reduced rate automatic where the conditions are met, with the option to opt out.

HMRC will now draft legislation on the move in the form of draft clauses to be included in the Finance Bill 2012.

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