Charitable Giving in Your Will: UK Inheritance Tax Benefits

David and Margaret owned a £950,000 estate - their family home worth £675,000 plus £275,000 in savings and investments. With two adult children, they assumed their will was straightforward: split everything 50/50. What they didn't realize was that their estate faced a £130,000 inheritance tax bill (40% on £325,000 after the nil-rate band).

Their financial adviser showed them a different approach: leave £48,000 (10% of the taxable estate) to three charities they'd supported for years. This single change reduced their IHT rate from 40% to 36%, saving their children £19,200 while supporting causes they cared about. The net result? Their children received more, and charities benefited too.

In 2024, legacy income to UK charities increased by 9%, with the number of charitable estates reaching 46,000—a 22% increase on the previous year. Following the Autumn 2024 Budget announcement that IHT thresholds remain frozen until 2030 and pensions will be subject to IHT from April 2027, the proportion of estates facing inheritance tax is projected to increase significantly.

This guide explains exactly how charitable giving in your will reduces inheritance tax, how much you need to leave to qualify for the reduced rate, and how to make it happen.

Why Charitable Giving Matters for Inheritance Tax Planning

Leaving money to charity in your will provides two separate inheritance tax benefits that work together to reduce your estate's tax liability.

First, any amount you leave to a qualifying UK charity is 100% exempt from inheritance tax. There's no limit to this exemption—whether you leave £1,000 or £100,000, that entire amount passes to the charity tax-free. This charitable exemption has existed for decades and applies to all registered UK charities.

Second, if you leave 10% or more of your net estate to charity, your entire remaining estate qualifies for a reduced inheritance tax rate of 36% instead of the standard 40%. This 4% reduction applies to everything else in your estate, not just the charitable portion.

These two benefits combine in a powerful way. Sarah inherited an £800,000 estate after her parents died. Their will left £57,500 (10% of their baseline amount) to Cancer Research UK. This gift was completely tax-free, and the remaining £742,500 was taxed at 36% instead of 40%. The family paid £29,700 less in inheritance tax than they would have without the charitable gift.

According to Remember A Charity's 2024 research, 60% of professional advisers believe Inheritance Tax changes announced in the Autumn 2024 Budget will encourage more people to include charitable gifts in their wills. With IHT thresholds frozen until 2030, more estates will face tax bills, making charitable giving strategies increasingly relevant.

The psychological benefit shouldn't be overlooked either. For many people, the thought of 40% of their estate going to HMRC feels frustrating. Redirecting some of that money to causes they've supported throughout their lives—while actually reducing the tax burden on their family—creates a legacy that reflects their values.

The Two Tax Benefits of Charitable Giving in Your Will

Understanding how these two benefits work separately and together helps you make informed decisions about charitable giving in your will.

Benefit 1: The Charitable Exemption

Any gift to a qualifying UK charity is completely exempt from inheritance tax, regardless of size. This exemption is unlimited—you could leave £10,000 or £1,000,000 to charity, and none of it would be subject to the 40% IHT rate.

James left £25,000 to the RSPCA and £15,000 to his local hospice. Both gifts were 100% IHT-exempt. If he hadn't made these charitable gifts, that £40,000 would have been taxed at 40%, costing his estate £16,000.

The charitable exemption is straightforward: it simply removes charitable gifts from your taxable estate before any tax calculations are made.

Benefit 2: The Reduced Rate

If your charitable gifts total 10% or more of your "baseline amount," your entire remaining estate is taxed at 36% instead of 40%. This reduced rate was introduced in April 2012 to incentivize charitable giving.

The 4% reduction applies to everything that remains in your estate after deducting the charitable gifts. For a £1 million estate with a £325,000 nil-rate band and £67,500 in charitable gifts (10% of the £675,000 baseline), the remaining £607,500 is taxed at 36% rather than 40%.

How They Work Together

Here's a comparison showing both benefits in action:

Scenario A: £1,000,000 estate, no charitable gifts

Taxable amount: £675,000 (after £325,000 nil-rate band)
IHT at 40%: £270,000
Family receives: £730,000

Scenario B: £1,000,000 estate, £67,500 to charity (10%)

Charitable gift (100% exempt): £67,500 to charity
Remaining taxable amount: £607,500
IHT at 36%: £218,700
Family receives: £713,800
Total tax saving: £51,300

In Scenario B, the family receives £713,800 while charity receives £67,500. Without the charitable gift, the family would receive £730,000—only £16,200 more. The charitable gift of £67,500 only cost the family £16,200 because of the combined tax benefits.

The "sweet spot" for most people is precisely 10% of the baseline amount. This percentage qualifies you for the reduced rate without giving away more than necessary, creating maximum tax efficiency while supporting causes you care about.

Understanding the 10% Test and "Baseline Amount"

The calculation that determines whether your estate qualifies for the 36% reduced rate is more specific than many people realize. You're not calculating 10% of your total estate value—you're calculating 10% of your "baseline amount."

Your baseline amount is your net estate after deducting certain allowances and exemptions, but before deducting your charitable gift. Here's how to calculate it:

Start with your total estate value. This includes your property, savings, investments, life insurance payouts, and any other assets you own.

Deduct the nil-rate band, which is currently £325,000 and remains frozen at this level until April 2030.

Deduct any spouse or civil partner exemption. Assets passing to your spouse or civil partner are completely exempt from IHT, so these aren't included in your baseline calculation.

Deduct any residence nil-rate band (RNRB) if applicable. The RNRB is currently £175,000 per person when leaving your main residence to direct descendants, and this is also frozen until April 2030.

What remains is your baseline amount. Your charitable gift must equal at least 10% of this number to qualify for the reduced rate.

Worked Example

Emma's estate is worth £900,000. Her husband died years ago, and she has two adult children. Let's calculate her baseline amount:

Total estate: £900,000
Minus nil-rate band: £325,000
Minus RNRB (home to children): £175,000
Baseline amount: £400,000
10% of baseline: £40,000

Emma needs to leave at least £40,000 to charity to qualify for the 36% rate. If she leaves exactly £40,000 to charity, the remaining £360,000 (after deducting all allowances and the charitable gift) is taxed at 36% instead of 40%.

This is where many people get confused. They calculate 10% of their total estate (£90,000 in Emma's case) rather than 10% of the baseline amount (£40,000). The difference is substantial—nearly £50,000 in this example.

Important note about estate components: For most straightforward estates, there's one simple calculation. However, estates can be divided into separate "components" (general estate, survivorship property, and settled property) that are tested separately. Joint property that passes by survivorship and trust property create additional components.

If your estate includes jointly owned property with someone other than your spouse, or if you're dealing with trusts or settled property, the calculation becomes more complex. For precise calculations in these situations, use HMRC's official reduced rate calculator or consult a tax professional.

Disclaimer: The baseline amount calculation can be complex for estates with multiple components (survivorship property, settled property, or lifetime gifts). The examples provided are simplified; for precise calculations, use HMRC's official reduced rate calculator or consult a tax professional.

How Much Should You Leave to Charity?

The amount you choose to leave to charity depends on your estate size, your family circumstances, and your personal values. There's no single "right" answer, but there are strategic approaches that work for different situations.

The Strategic Approach: Exactly 10%

For purely tax-optimization purposes, 10% of your baseline amount is the threshold that unlocks the reduced rate. Leaving this exact percentage gives you maximum tax efficiency without committing more than necessary to charitable causes.

Michael calculated his baseline amount at £575,000. He left exactly £57,500 (10%) to three charities he'd supported throughout his working life. This qualified his estate for the 36% rate while leaving 90% of his estate to his two children.

Percentage vs. Fixed Amount

How you structure your charitable gift matters as much as how much you give.

A fixed amount (called a pecuniary legacy) states a specific sum: "I give £50,000 to Cancer Research UK." This is simple and clear, but it has limitations. If your estate grows over time, that £50,000 might no longer represent 10% of your baseline amount, meaning you'd lose the reduced rate benefit. If your estate shrinks, £50,000 might represent more than you intended to give.

A percentage of your residuary estate adjusts automatically with your estate's value: "I give 10% of my residuary estate to Cancer Research UK." Research shows that over 90% of legacy income comes from percentage-based residuary gifts rather than fixed amounts, because they remain proportionate regardless of how your estate value changes.

For most people planning to meet the 10% threshold, a percentage-based gift is the recommended approach.

You Can Leave More Than 10%

The 10% figure is a minimum threshold for the reduced rate, not a maximum. Many people choose to leave significantly more to charity based on their values and circumstances.

Patricia, a widow with a £2 million estate and one adult daughter, decided to leave 25% of her estate to charities. Her estate plan left £500,000 to five organizations she'd volunteered with over her lifetime, with the remaining £1.5 million (after tax) going to her daughter. Patricia's daughter fully supported this decision, recognizing it reflected her mother's lifelong commitment to these causes.

According to Remember A Charity's research, 50% of millionaires have included a charitable gift in their will, rising to 75% for those with estates of £5 million or more. For high-net-worth individuals, leaving more than 10% to charity often makes sense both financially and personally.

Family-First Reassurance

Many people worry that leaving money to charity means taking it away from their family. But the mathematics often show otherwise, particularly for larger estates.

Even leaving exactly 10% to charity typically means your family inherits only marginally less (or sometimes even more, as we'll see in the detailed scenarios later) due to the 4% rate reduction. You're not choosing between family and charity—you're optimizing how your estate is distributed.

Multiple Charities

You can split your charitable gift among several organizations. Many people leave 10% divided equally between three or four charities they've supported throughout their lives.

"I give 10% of my residuary estate to be divided equally between Cancer Research UK (Charity No. 1089464), the RSPCA (Charity No. 219099), and Macmillan Cancer Support (Charity No. 261017)."

This approach allows you to support multiple causes while still meeting the 10% threshold for the reduced rate.

Can You Leave Everything to Charity?

Legally, yes. In England, Wales, and Northern Ireland, you can leave your entire estate to charity if you choose. However, if you have financially dependent family members (spouse, children, or others who relied on you for support), they can challenge your will under the Inheritance (Provision for Family and Dependents) Act 1975. Courts can overturn your wishes if they determine your dependents were inadequately provided for.

For most people, balancing family provision with charitable giving creates the most secure and appropriate estate plan.

Which Charities Qualify for Inheritance Tax Relief?

Not all charitable organizations qualify for the IHT exemption and reduced rate. The rules are specific, and recent changes have made them more restrictive.

UK Registered Charities Only

Since April 2024, only UK registered charities qualify for inheritance tax relief. This represents a significant change from previous rules that allowed certain overseas charities to qualify.

To qualify as a UK charity for tax purposes, an organization must be registered with one of these bodies:

Charity Commission for England and Wales
Office of the Scottish Charity Regulator (OSCR)
Charity Commission for Northern Ireland

The charity must be subject to the control of UK courts. This "jurisdiction condition" means the organization must be established in the UK and governed by UK law.

April 2024 Restriction

Before April 2024, certain European Economic Area (EEA) charities that were registered with HMRC could qualify for UK inheritance tax relief. This changed on 1 April 2024.

Andrew's will, written in 2020, left £30,000 to an international development charity based in France that he'd supported for years. When he died in 2025, this gift no longer qualified for IHT relief. His executors contacted the charity's UK-registered branch and redirected the gift there, preserving the tax relief.

If you have a will that includes gifts to overseas charities, review it now. Your gift may no longer qualify for tax relief unless redirected to the charity's UK branch (if one exists).

Community Amateur Sports Clubs (CASCs)

Registered CASCs also qualify for the same inheritance tax exemption as charities. If you're passionate about your local football club, cricket club, or other community sports organization, gifts to registered CASCs receive the same tax benefits.

How to Verify Charity Status

Before including a charity in your will, verify its current registered status:

For England and Wales: Check the Charity Commission register
For Scotland: Check the OSCR register
For Northern Ireland: Check the Charity Commission for Northern Ireland

Always include the charity's registered number in your will. This prevents ambiguity if the charity's name changes or if multiple organizations have similar names.

What Doesn't Qualify

These organizations do NOT qualify for inheritance tax relief:

Overseas charities (even well-known international organizations)
Private foundations not registered as charities
Crowdfunding campaigns or personal causes (GoFundMe, etc.)
Political parties
Social enterprises or community interest companies (unless also registered as charities)

Religious Organizations

Churches, mosques, synagogues, temples, and other religious organizations qualify if they're registered as charities. Most established religious institutions in the UK are registered, but always verify the charity number before including them in your will.

What Happens If a Charity No Longer Exists?

If a charity named in your will has closed or merged by the time you die, courts can apply the "cy-près doctrine" to redirect your gift to a similar charity with comparable purposes. However, this adds complexity and potential delay.

To avoid this, consider naming an alternate charity in your will: "I give 10% of my residuary estate to Cancer Research UK (Charity No. 1089464), or if that charity has ceased to exist, to Macmillan Cancer Support (Charity No. 261017)."

Disclaimer: Always verify a charity's current registered status before including them in your will. Charity names and registrations can change. Check the Charity Commission register at register-of-charities.charitycommission.gov.uk.

How to Leave Money to Charity in Your Will

There are three main ways to structure charitable gifts in your will, each with different advantages and considerations.

1. Pecuniary Legacy (Fixed Amount)

A pecuniary legacy leaves a specific sum of money to charity:

"I give £10,000 to Cancer Research UK (Charity No. 1089464)."

Advantages:

Simple and clear
The charity knows exactly what to expect
Easy for executors to administer

Disadvantages:

Fixed amount may not keep pace with inflation
If your estate grows or shrinks, the gift may no longer represent 10% of your baseline
Less tax-efficient if your estate value changes significantly

Pecuniary legacies work well for smaller charitable gifts or when you want to leave specific amounts to multiple charities, but they're less reliable for meeting the 10% threshold over time.

2. Specific Legacy (Specific Items)

A specific legacy leaves particular assets to charity:

"I give my shares in ABC Limited to Oxfam GB (Charity No. 202918)."

This type of gift is less common for most people but can be useful if you own specific assets you want to benefit charity—such as property, artwork, investment portfolios, or business shares.

Jennifer owned a £200,000 investment portfolio of ethical funds. She left these specific shares to an environmental charity, knowing they aligned with both her values and the charity's mission.

Advantages:

Allows you to give specific meaningful assets
Can be valuable for property or investment portfolios
The charity receives the asset directly rather than cash

Disadvantages:

Asset values fluctuate, making 10% calculations unpredictable
More complex for executors to administer
May not be suitable if the charity can't use or doesn't want the specific asset

3. Residuary Legacy (Percentage of Estate)

A residuary legacy leaves a percentage of your remaining estate after all debts, expenses, and specific gifts have been paid:

"I give 10% of my residuary estate to Cancer Research UK (Charity No. 1089464)."

Advantages:

Automatically adjusts with your estate value
Reliably meets the 10% test regardless of how your estate grows or shrinks
Most tax-efficient approach
Accounts for inflation and asset value changes

Disadvantages:

The charity won't know the exact amount until your estate is valued
If you have significant debts or expenses, the percentage might represent less than you expected

This is the recommended approach for most people who want to qualify for the reduced IHT rate. Over 90% of legacy income comes from residuary gifts because they remain proportionate and tax-efficient.

Wording Examples

Here are sample clauses for different scenarios:

Single charity, 10% residuary gift: "I give 10% of my residuary estate to Cancer Research UK (Charity No. 1089464) for its general charitable purposes."

Multiple charities, split equally: "I give 10% of my residuary estate to be divided equally between:

Cancer Research UK (Charity No. 1089464)
Macmillan Cancer Support (Charity No. 261017)
The RSPCA (Charity No. 219099) for their respective general charitable purposes."

Fixed amount with residuary gift: "I give £5,000 to my local hospice, St. Barnabas Hospice Trust (Charity No. 1053814), and 10% of my residuary estate to Cancer Research UK (Charity No. 1089464)."

Including an alternate charity: "I give 10% of my residuary estate to Cancer Research UK (Charity No. 1089464), or if that charity has ceased to exist at my death, to Macmillan Cancer Support (Charity No. 261017)."

Combining Approaches

You can combine different types of gifts. Some people leave fixed amounts to smaller local charities and a percentage of their residuary estate to larger organizations.

Richard left £2,000 each to three local charities—his village church, local hospice, and community center—and 10% of his residuary estate to a national cancer charity. This gave him the satisfaction of supporting local causes with meaningful amounts while using the larger percentage-based gift to meet the 10% threshold for the reduced rate.

Important Legal Wording

Always include:

The charity's full registered name (exactly as it appears in the register)
The charity registration number
The phrase "for its general charitable purposes" (this gives the charity flexibility to use the funds where most needed)

Online will services like WUHLD include straightforward options for adding charitable bequests with proper legal wording, ensuring your gifts qualify for tax relief and are legally enforceable.

Learn more about how to structure different types of gifts in your will for comprehensive estate planning guidance.

Common Mistakes to Avoid When Leaving Gifts to Charity

Even well-intentioned charitable gifts can fail to provide tax benefits or create complications if not structured properly. Here are the most frequent errors and how to avoid them.

Mistake 1: Not Including the Charity Number

Louise's will stated: "I give £25,000 to Cancer Research." When she died, her executors discovered there were multiple cancer charities with similar names. It took six months of legal correspondence to clarify her intentions, delaying the estate administration.

Do this instead: Always include the charity's full registered name and charity number: "Cancer Research UK (Charity No. 1089464)." This prevents ambiguity and ensures your gift goes exactly where intended.

Mistake 2: Naming an Overseas Charity

Graham's 2019 will left £40,000 to an international development charity based in Belgium that he'd supported for decades. When he died in 2025, this gift didn't qualify for IHT relief due to the April 2024 rule change restricting relief to UK charities only.

Do this instead: Check if international charities you support have UK-registered branches. Many major international organizations (Oxfam, Save the Children, Médecins Sans Frontières) have separate UK charities. Name the UK branch with its UK charity number to preserve tax relief.

Mistake 3: Using Outdated Charity Names

Philip's will from 2010 left money to "Help the Aged," a charity he'd supported for years. By the time he died in 2024, Help the Aged had merged with Age Concern to become Age UK. While the gift was eventually redirected, it required additional legal work and court approval.

Do this instead: Review your will every 3-5 years and verify charity names are current. Including the charity number helps because numbers remain constant even when names change.

Mistake 4: Calculating 10% Incorrectly

Catherine assumed she needed to leave 10% of her total £900,000 estate—£90,000—to qualify for the reduced rate. In reality, after deducting her nil-rate band (£325,000) and RNRB (£175,000), her baseline amount was only £400,000, meaning she only needed to leave £40,000. She left more than double what was necessary to achieve the tax benefit.

Do this instead: Calculate 10% of your baseline amount (estate minus nil-rate band, RNRB, and exemptions), not 10% of your gross estate. Use HMRC's reduced rate calculator for accurate calculations specific to your circumstances.

Mistake 5: Fixed Amount That Doesn't Scale

When Robert wrote his will in 2010, his estate was worth £500,000 and he left £50,000 to charity (10% of his baseline at the time). By 2025, his estate had grown to £1.2 million through property appreciation and investment growth. His fixed £50,000 gift now represented only 5.7% of his baseline amount, meaning his estate no longer qualified for the reduced rate.

Do this instead: Use a percentage-based residuary gift ("10% of my residuary estate") rather than a fixed amount. The percentage adjusts automatically as your estate value changes.

Mistake 6: Not Reviewing After Major Life Changes

Diana's will left 15% of her estate to charity, written when she was single. After marriage and having two children, she never updated her will. While the charitable gift still qualified for the reduced rate, her family circumstances had changed dramatically and the percentage no longer reflected her current priorities.

Do this instead: Review your will after major life events (marriage, divorce, children, significant wealth changes) and every 3-5 years. Your charitable giving strategy should reflect your current circumstances and values.

Mistake 7: Assuming Verbal Wishes Are Binding

Thomas told his children he wanted £50,000 to go to his favorite charity but never put it in his will. After his death, this verbal wish had no legal force. While his children honored his wishes, there was no tax benefit because the gift wasn't documented in a valid will.

Do this instead: Charitable intentions must be in a properly executed, legally valid will to qualify for IHT relief. Verbal wishes, letters, or informal notes carry no legal weight for tax purposes.

Mistake 8: Forgetting to Tell Executors

Sandra included charitable gifts in her will but never mentioned them to her appointed executors. When she died, they initially calculated IHT at 40%, only discovering the 10% charitable gifts months later during detailed will review. This delayed estate administration and required amended tax calculations.

Do this instead: While not legally required, inform your executors that your will includes charitable gifts qualifying for the reduced rate. This helps them administer your estate efficiently and claim the correct tax reliefs from the start.

For each of these mistakes, proper planning and professional guidance (whether from a solicitor or a comprehensive online will service) helps you avoid costly errors.

Real-World Scenarios: Does the 10% Rule Actually Save Money?

The theoretical benefit of leaving 10% to charity sounds compelling, but does it actually work in practice? Let's examine four realistic scenarios showing exactly how the mathematics work for different estate sizes.

Scenario 1: £600,000 Estate (Modest Wealth)

Helen is a widow who owns a £450,000 home and has £150,000 in savings. She has two adult children.

Without Charitable Gift:

Total estate: £600,000
Minus nil-rate band: £325,000
Minus RNRB (home to children): £175,000
Taxable amount: £100,000
IHT at 40%: £40,000
Family receives: £560,000

With 10% Charitable Gift:

Baseline amount: £100,000 (after deducting NRB and RNRB)
10% charitable gift required: £10,000
Charitable gift (tax-free): £10,000 to charity
Remaining taxable: £90,000
IHT at 36%: £32,400
Family receives: £557,600
Charity receives: £10,000

Result: Family receives £2,400 less, but Helen supports a cause she cares about with £10,000. The effective "cost" to her family is only £2,400 (not £10,000) because of the tax savings. If Helen values leaving a charitable legacy, this represents good value—£10,000 to charity for only £2,400 less to family.

Scenario 2: £900,000 Estate (Upper-Middle Wealth)

Michael owns a £625,000 home and has £275,000 in investments and savings. He's widowed with three adult children.

Without Charitable Gift:

Total estate: £900,000
Minus nil-rate band: £325,000
Minus RNRB: £175,000
Taxable amount: £400,000
IHT at 40%: £160,000
Family receives: £740,000

With 10% Charitable Gift:

Baseline amount: £400,000
10% charitable gift required: £40,000
Charitable gift (tax-free): £40,000 to charity
Remaining taxable: £360,000
IHT at 36%: £129,600
Family receives: £730,400
Charity receives: £40,000

Result: Family receives £9,600 less, while charity receives £40,000. The tax saving is £30,400 (the difference between £160,000 and £129,600). Michael's £40,000 charitable gift effectively costs his family only £9,600—less than 25% of the gift amount. This represents substantial charitable impact with modest family cost.

Scenario 3: £1,200,000 Estate (High Wealth)

Susan owns a £750,000 home, has £300,000 in investments, and £150,000 in other assets. She's a widow with two children.

Without Charitable Gift:

Total estate: £1,200,000
Minus nil-rate band: £325,000
Minus RNRB: £175,000
Taxable amount: £700,000
IHT at 40%: £280,000
Family receives: £920,000

With 10% Charitable Gift:

Baseline amount: £700,000
10% charitable gift required: £70,000
Charitable gift (tax-free): £70,000 to charity
Remaining taxable: £630,000
IHT at 36%: £226,800
Family receives: £903,200
Charity receives: £70,000

Result: Family receives £16,800 less while charity receives £70,000. The tax saving is £53,200. Susan's charitable gift of £70,000 costs her family only £16,800—just 24% of the gift amount. The family still inherits over £900,000 while creating a significant charitable legacy.

Scenario 4: £1,800,000 Estate (The Breakeven Point)

David has substantial wealth: a £950,000 home plus £850,000 in investments and pension assets. He's widowed with one adult daughter.

Without Charitable Gift:

Total estate: £1,800,000
Minus nil-rate band: £325,000
Minus RNRB: £175,000
Taxable amount: £1,300,000
IHT at 40%: £520,000
Family receives: £1,280,000

With 10% Charitable Gift:

Baseline amount: £1,300,000
10% charitable gift required: £130,000
Charitable gift (tax-free): £130,000 to charity
Remaining taxable: £1,170,000
IHT at 36%: £421,200
Family receives: £1,248,800
Charity receives: £130,000

Result: Family receives £31,200 less while charity receives £130,000. The tax saving is £98,800 (£520,000 minus £421,200). David's £130,000 charitable gift costs his family only £31,200—just 24% of the gift amount.

Comparison Table: Family Inheritance Across All Scenarios

Estate Value	Without Charity	With 10% Charity	Difference to Family	Charity Receives	"Cost" as % of Gift
£600,000	£560,000	£557,600	-£2,400	£10,000	24%
£900,000	£740,000	£730,400	-£9,600	£40,000	24%
£1,200,000	£920,000	£903,200	-£16,800	£70,000	24%
£1,800,000	£1,280,000	£1,248,800	-£31,200	£130,000	24%

Key Takeaway

Across all estate sizes above the IHT threshold, the 10% charitable gift consistently costs families approximately 24% of the gift amount due to the combined tax savings. A £40,000 charitable gift costs the family only about £9,600 in reduced inheritance.

For larger estates, this creates an opportunity for substantial charitable impact with relatively modest family cost. Many families find that giving £70,000 or £130,000 to causes that mattered to their parents is worthwhile when it only reduces their inheritance by £16,800 or £31,200 respectively.

The mathematics become even more favorable for estates over £2 million, though these higher-value estates often benefit from professional tax and estate planning advice to optimize all available reliefs.

Disclaimer: These scenarios are illustrative examples and may not reflect your personal circumstances. Estate values, available reliefs, and personal exemptions vary. For calculations specific to your estate, consult a financial adviser or use HMRC's official calculator.

How to Add a Charitable Gift to Your Will (Next Steps)

Whether you're creating your first will or updating an existing one, adding charitable gifts requires a clear process to ensure you receive the tax benefits and your wishes are legally protected.

If You Don't Have a Will Yet

Creating a will with charitable bequests involves six straightforward steps:

1. Calculate Your Approximate Estate Value

Add up all your assets:

Property (home, investment properties)
Savings and current accounts
Investments (ISAs, stocks, bonds, investment portfolios)
Life insurance policies that pay out on death
Pension death benefits (note: from April 2027, most pension wealth will be subject to IHT)
Business assets or shares
Valuable personal property (jewelry, art, vehicles)

Don't worry about being precisely accurate—a reasonable estimate helps you plan effectively.

2. Determine Your Baseline Amount

From your estate value, deduct:

Nil-rate band: £325,000
Residence nil-rate band: £175,000 (if leaving your home to children or grandchildren)
Any spouse or civil partner exemption (if applicable)
Business property relief or agricultural property relief (if applicable)

The remaining amount is your baseline for calculating the 10% charitable gift.

3. Calculate 10% of Your Baseline

Multiply your baseline amount by 10% to identify the minimum qualifying charitable gift. Remember, you can leave more if you choose, but 10% is the threshold for the reduced rate.

4. Choose Your Charities

Select the charity or charities you want to support. Verify each one is UK-registered using the Charity Commission register, OSCR register (Scotland), or Charity Commission for Northern Ireland.

Record each charity's:

Full registered name (exactly as it appears)
Charity registration number
Address (optional but helpful)

5. Decide on Gift Type

For most people meeting the 10% threshold, a percentage-based residuary gift is recommended:

"I give 10% of my residuary estate to [Charity Name, Charity No. XXXXXX]."

This automatically adjusts with your estate value and reliably qualifies for the reduced rate regardless of future changes.

6. Create Your Will

Create a legally valid will that includes your charitable bequests with proper wording. You have several options:

Solicitor: Traditional route, typically costs £650+ and takes 2-4 weeks. Best for very complex estates (over £2m, multiple trusts, business assets).
Online will service: Services like WUHLD guide you through the process, include proper legal wording for charitable gifts, and cost £49.99 with completion in 15-20 minutes.
DIY will kit: Not recommended for wills including tax-planning strategies, as incorrect wording can invalidate tax benefits.

If You Already Have a Will

Review your existing will to determine if it needs updating:

Check if charitable gifts are included. Review your current will to see if you've already included charitable bequests. If not, and you want to add them, you'll need to update your will.

Calculate whether current gifts meet the 10% threshold. If you already have charitable gifts in your will, calculate whether they represent 10% or more of your baseline amount. Estate values change over time, so a gift that once met the threshold may no longer qualify if your estate has grown significantly.

Consider updating via codicil or new will. For minor changes (updating a charity name or adding a single small gift), a codicil (legal amendment) may suffice. For substantial changes (adding or removing beneficiaries, changing charitable gift percentages, updating executors), creating a new will is generally better. Most solicitors and online services recommend a new will for clarity and to avoid potential conflicts between documents.

Verify charity names and numbers are current. Charities merge, rebrand, or occasionally close. Verify that any charities named in your existing will still exist and are registered, and check their current legal names and charity numbers.

When Professional Advice Is Needed

While many people can successfully include charitable gifts in their wills using online services, certain situations require professional advice from a solicitor or tax specialist:

Estates valued over £2 million
Multiple estate components (survivorship property, settled property, or multiple lifetime gifts)
Business property or agricultural property requiring special reliefs
Trusts or complex settlement structures
Blended families with competing interests between current spouse and children from previous relationships
Overseas property or assets

Using WUHLD for Charitable Giving

WUHLD's online platform makes it straightforward to include charitable bequests in your will:

The platform specifically asks whether you want to include charitable gifts during the will-creation process, with guided questions about gift types (fixed amounts vs. percentages) to help you choose the most appropriate structure.

You can add one or multiple charities, with fields for the registered charity name, charity number, and gift amount or percentage. The platform uses proper legal wording to ensure your gifts qualify for IHT relief and are legally enforceable.

Before paying anything, you can preview your complete will to verify your charitable bequests are correctly documented exactly as you intended. This eliminates surprises and ensures accuracy.

For a one-time payment of £49.99, you receive four complete documents: your legally binding will, a 12-page Testator Guide explaining how to execute your will properly, a Witness Guide for your witnesses, and a Complete Asset Inventory document to help organize your estate information.

Timeline

Most people can add charitable gifts to their will in 15-20 minutes using an online service like WUHLD. The traditional solicitor approach typically requires initial consultation, drafting, review, and signing over 2-4 weeks.

Once your will is complete and properly executed (signed in front of two independent witnesses), your charitable bequests are legally binding and your estate qualifies for the reduced IHT rate.

For related guidance on optimizing your overall estate plan, see our article on estate planning for high earners.

Frequently Asked Questions

Q: Do I pay inheritance tax on money left to charity?

A: No. Gifts to UK registered charities are 100% exempt from inheritance tax with no limit on the amount. Additionally, if you leave 10% or more of your net estate (after certain deductions) to charity, the inheritance tax rate on the rest of your estate reduces from 40% to 36%. This means charitable gifts receive double tax benefits—complete exemption for the charitable portion and a reduced rate on everything else.

Q: How much should I leave to charity to reduce inheritance tax?

A: To qualify for the reduced 36% IHT rate, you must leave at least 10% of your "baseline amount" to UK registered charities. Your baseline amount is your net estate after deducting the £325,000 nil-rate band, the £175,000 residence nil-rate band (if applicable), and any spouse exemption. For example, a £900,000 estate with a baseline of £400,000 would need to leave at least £40,000 to charity to qualify. You can leave more than 10% if you choose, but 10% is the minimum threshold for the reduced rate.

Q: Which charities qualify for inheritance tax relief in the UK?

A: Only UK registered charities qualify for inheritance tax relief. Charities must be registered with the Charity Commission for England and Wales, the Office of the Scottish Charity Regulator (OSCR), or the Charity Commission for Northern Ireland. Since April 2024, overseas charities no longer qualify, even if they're well-known international organizations. Community Amateur Sports Clubs (CASCs) also qualify for the same tax relief. Always verify a charity's registration status and include their charity number in your will.

Q: What happens if the charity I name in my will no longer exists?

A: If a charity named in your will has closed, merged, or no longer exists when you die, the courts can apply the "cy-près doctrine" to redirect your gift to a similar charity with comparable purposes. However, this adds complexity and delay to estate administration. To avoid this situation, consider naming an alternate charity in your will: "or if that charity has ceased to exist, to [Alternative Charity Name, Charity No. XXXXXX]." Review your will every 3-5 years to verify charities still exist and update names if they've changed.

Q: Can leaving 10% to charity mean my family inherits more?

A: For most estates, the family will inherit slightly less when 10% goes to charity, but the "cost" to the family is typically only about 24% of the gift amount due to tax savings. For example, a £40,000 charitable gift usually reduces family inheritance by only about £9,600. In very rare cases with estates structured in specific ways, the 4% rate reduction can potentially offset the entire cost of the 10% gift, meaning the family inherits approximately the same amount while charity also benefits. However, you should plan on the basis that your family will inherit modestly less, with the exact amount depending on your estate size and structure.

Q: Do I need a solicitor to leave money to charity in my will?

A: Not necessarily. For straightforward estates, online will services like WUHLD (£49.99) can help you create a legally valid will including charitable bequests with the correct legal wording. These platforms guide you through adding charitable gifts and ensure proper formatting to qualify for tax relief. However, if your estate involves trusts, business property, agricultural property, multiple estate components, or is valued over £2 million, professional legal advice from a solicitor is recommended to ensure all tax reliefs and benefits are optimized.

Q: Can I split my 10% charitable gift between multiple charities?

A: Yes, absolutely. You can divide your 10% charitable gift among several organizations. Many people choose to support 3-4 different charities by leaving "10% of my residuary estate to be divided equally between [Charity A], [Charity B], and [Charity C]." As long as the total equals 10% or more of your baseline amount, your estate qualifies for the reduced rate. Always include each charity's full registered name and charity number to prevent ambiguity.

Q: Does the 10% charitable gift have to come from my residuary estate, or can it be a fixed amount?

A: You can structure charitable gifts as either fixed amounts (pecuniary legacies) or as a percentage of your residuary estate. However, percentage-based gifts are generally recommended for meeting the 10% threshold because they automatically adjust with your estate value. A fixed amount that represents 10% of your baseline today might only represent 6% or 7% in ten years if your estate grows, meaning you'd lose the reduced rate benefit. Percentage gifts reliably maintain the 10% threshold regardless of estate value changes.

Creating Your Will with Charitable Giving

Your will is more than a tax document—it's a reflection of your values and the legacy you choose to leave. Whether you're strategically optimizing inheritance tax or creating philanthropic impact aligned with causes you've supported throughout your life, the decision to include charitable giving in your will is both financially sound and personally meaningful.

With proper planning, your family and the causes you care about can both benefit from your estate.

Key takeaways:

Understand the double benefit: Charitable gifts are 100% IHT-exempt, AND leaving 10% or more of your baseline amount reduces your IHT rate from 40% to 36% on the entire remaining estate
Calculate your baseline correctly: Your baseline is your estate value minus the £325,000 nil-rate band, the £175,000 residence nil-rate band (if applicable), and exemptions—not your gross estate value
Only UK registered charities qualify: Since April 2024, overseas charities no longer receive IHT relief; verify charity status and always include charity numbers in your will
Use percentage-based gifts: Residuary legacies (e.g., "10% of my residuary estate") are more reliable than fixed amounts for meeting the 10% threshold as your estate value changes over time
Run the numbers for your estate: The 10% charitable gift typically costs families about 24% of the gift amount due to tax savings; use HMRC's calculator or review the scenarios to understand your specific situation
Document it properly: Charitable intentions must be in a valid, legally binding will to qualify for tax relief—verbal wishes or informal notes have no legal force

Creating a will that includes charitable bequests doesn't require expensive solicitor fees or weeks of appointments. With WUHLD, you can create a complete, legally valid will with properly structured charitable gifts in just 15 minutes online.

For a one-time payment of £49.99, you'll receive:

Your complete, legally binding will with charitable bequests using proper legal wording
A 12-page Testator Guide explaining how to execute your will correctly
A Witness Guide to give to your two witnesses
A Complete Asset Inventory document to organize your estate information

You can preview your entire will free before paying anything to verify your charitable gifts are correctly documented and that you're comfortable with all provisions. No credit card required for the preview, no subscriptions, no hidden fees.

Start your will today and ensure your charitable intentions are legally protected while potentially reducing your family's inheritance tax bill.

Preview Your Will Free – No Payment Required

Legal Disclaimer: This article provides general information about UK inheritance tax and charitable giving in wills and does not constitute legal or financial advice. For advice specific to your individual situation, please consult a qualified solicitor or financial adviser. WUHLD's online will service is suitable for straightforward UK estates; complex situations involving trusts, business property relief, agricultural property relief, or estates over £2m may require professional legal advice. Inheritance tax rules are subject to change; this article reflects legislation as of October 2025.

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