Remember a Charity calls for charitable wills to be exempt from VAT

15 Mar 2017 News

Legacies consortium Remember a Charity has called on the government to make wills exempt from VAT if they include a charitable gift, claiming it could generate a further £800m for good causes in the process. 

Charities themselves do not pay VAT on wills, but anyone making a will has to pay VAT on services provided by solicitors. Remember a Charity believes that if there was a VAT exemption for people giving gifts to charities, this would encourage all solicitors and will-writers to mention charitable legacies when they prepare wills.

It says this could lead to a growth in the number of charitable bequests, from 37,000 to 52,000 each year, which it believes could be worth £800m.

The cost to government would be £1.3m if all wills cost £150 to make, although the likely cost would be higher, because many wills cost much more - and also because government would lose out on substantial inheritance taxes if more estates went to charity.

In a statement released yesterday, Remember a Charity estimated that "VAT exemption on charitable wills could double the number of people leaving a gift to charity in their will, generating a further £800m for good causes for the relatively low cost to government".

The call was made by the consortium as part of a two-pronged legacies campaign, which also saw Remember a Charity call on the government to re-examine recent changes to the fee structure for estates going to probate

The statement said this was part of the consortium’s “wider campaign with the government” to secure fiscal incentives that will encourage legacy giving among the wider UK population, “not only those affected by Inheritance Tax (IHT). 

‘Charities are facing two major threats to legacy income’

Rob Cope, director of Remember a Charity, said that changes in the fee structure of probate and to the Inheritance Tax threshold which will come into force from April would be like a “double whammy” for legacy fundraising. 

“Charities are facing two major threats to legacy income,” said Cope. “We know that IHT exemption is a powerful motivator for financial advisers to raise the issue of legacy giving with clients and to encourage people to give. 

“But from April, the IHT threshold is going up and it will be relevant to fewer people, which means that solicitors will have to approach the topic of legacy giving in a different way. Together with the hike in probate fees, this is a double whammy that could have a detrimental impact on legacy giving and their family estates.

“We are calling on government to introduce a VAT exemption on the cost of writing all wills that include a charitable gift. While this change would come at a relatively low cost to government, this could make a huge difference to charities, giving solicitors and Will-writers cause to highlight the option and benefits of legacy giving with all clients.”

Both the Charity Finance Group and the Institute of Fundraising have supported Remember a Charity’s campaign. 

 

 

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