Inheritance tax change could benefit the people and causes you love
On 6 April 2012, changes to the tax laws mean your family could benefit from a reduced rate of inheritance tax if you leave 10 percent or more of your estate to charity.
Any part of your estate above the Inheritance Tax threshold or nil rate band (currently £325,000) can attract Inheritance Tax (IHT) at a rate of 40 percent.
Under the new rules, the tax chargeable on an estate where the death has occurred on after April 6th 2012 will be reduced from 40 to 36 percent if 10 percent or more of the net estate is left to charity.
“But I thought the Chancellor promised a 10 percent reduction in IHT?”
The 10 percent reduction will be made AFTER other deductions have been made so the real result will be a 4 percent reduction.
CAFOD’s legacy manager, Beth Brook, comments: “This change in the law recognises the important role played by legacies in funding so much of the good work we take for granted. At CAFOD we receive gifts from the wills of just over 300 past supporters a year; and their gifts save and change hundreds of thousands of lives. If the new tax rate encourages more of our friends to remember us in their will, we’ll be able to help thousands more people each year.”
To find out more
A good solicitor will be able to advise you of your options and there’s also information on government websites such as Her Majesty’s Revenue and Customs (HMRC) and DirectGov. Alternatively you can call the Probate and Inheritance Tax helpline on 0845 302 0900.
Suggested wording for your will
The following clause is based on wording that’s been drafted by the Society of Trustees and Estate Practitioners, but is yet to be approved by HMRC. Please speak to your advisor or call the legacy team before taking further action.
“I give CAFOD (registered charity number 285776 of Romero House, 55 Westminster Bridge Road, London, SE1 7JB) such a sum as shall constitute a donated amount equal to 10 (or insert larger figure) per cent of the baseline amount in relation to my estate passing under this will as defined in each case in schedule 1A Inheritance Tax Act 1984 ignoring any election under paragraph 7 of the schedule. My executors may appropriate assets not otherwise specifically bequeathed to satisfy (or partly satisfy) this legacy without the consent of any beneficiary under my will or any codicil to my will."
Contact the legacy team
To discuss this new legislation please contact Emma Eagle, CAFOD’s legacy officer, on 020 7095 5352 or by emailing legacy@cafod.org.uk. To find out more about leaving a legacy to CAFOD, please visit http://www.cafod.org.uk/legacies
