Changes to inheritance tax (IHT) policy announced in last year’s autumn budget could boost charitable legacies, according to a new survey of professional advisers.
Chancellor Rachel Reeves announced a freeze on current IHT thresholds until 2030 last October, as well as the removal of an exemption for pension wealth from the tax from April 2027.
Following these policy changes, the Office for Budget Responsibility projected that the proportion of estates that qualify for IHT will increase from 5.2% in 2023-24 to 9.5% by 2030.
Some 62% of the 237 solicitors, professional will-writers and financial advisers who responded to Remember A Charity’s annual Professional Advisers Tracking Study predicted that more people will consider leaving a gift to charity from their estate in light of the IHT changes.
Advisers receiving more requests
This year’s survey, carried out by independent research agency Savanta, suggests that the recently announced IHT policies are already having an impact, with 60% of advisers receiving more requests for advice on estate or inheritance planning.
Some 65% of respondents said that as more estates will fall within the IHT scope, charitable tax incentives will become even more important to their clients.
Asked about the barriers for clients when it comes to donating through their will, most advisers cited clients wanting to pass on all their assets to family or friends (94%).
Advisers also noted a difficulty among their clients in choosing which charity to support (43%) and potential disputes or concerns between family members, friends or potential beneficiaries (42%).
The survey finds an increase in professional advisers raising the topic of leaving a charitable bequest with clients, with 77% “always” or “sometimes” doing so, up from 72% in 2023.
It shows that 24% of wills made by clients of advisers who always raise charitable giving included such a gift, compared to 14% among those who never do.
Remember A Charity’s long-term tracking reveals that the average proportion of charitable wills written through solicitors and will-writers increased from 17% in 2016 to 21% in 2024.
Charitable giving ‘can be a highly effective planning tool’
Tanya Watson, chartered tax adviser and senior director at Alvarez & Marsal Tax, said: “The changes to IHT are prompting a fundamental reassessment of estate planning strategies, particularly among clients who may not have previously been impacted.
“What we’re seeing is a growing need for tailored advice that balances financial objectives with personal values.
“Charitable giving can be a highly effective planning tool, and these changes provide a timely reason for advisers to revisit legacy plans with clients who may not have considered this route before.”
Lucinda Frostick, director of Remember A Charity, said professional advisers can have a “profound impact on clients’ decision-making”.
“While talking philanthropy isn’t always their comfort zone, fiscal incentives are – forming a natural starting point for approaching charitable giving.
“Even though the reasons for giving extend far beyond tax incentives, these IHT changes make the legacy conversation more relevant to a wider group.
“They present an ideal opportunity for advisers to raise the topic, building understanding of legacy giving and inspiring more clients to support the causes they care about.”
