Charitable giving is something many of us will do throughout our life, but it can also plan play an important role in Inheritance Tax (IHT) planning.

Unbeknownst to many, the two can work together, benefitting both the causes you care about and the people you leave behind.

The basics

Gifts to qualifying charities are entirely exempt from IHT, whether made during your lifetime or through your Will.There is no upper limit on this exemption.

If you leave at least 10 per cent of your net estate to charity, the rate of inheritance tax on the remainder of your estate can also fall from 40 per cent to 36 per cent.

For larger estates, this reduction can be worth a significant sum in its own right, separate from the value of the gift itself.

Giving now or giving later

Both routes are exempt from IHT, but they may lead to different outcomes.

A lifetime donation made under Gift Aid allows the charity to reclaim basic rate tax on top of your gift and higher and additional rate taxpayers can claim further relief through self-assessment.

This can make lifetime giving more valuable to the charity than the same sum left in a Will.

A gift through your Will keeps the asset in your estate during your lifetime, which some individuals prefer for flexibility.

It also allows for larger or more complex gifts, such as property or a share of the residue.

A key change worth planning for

Since 6 April 2026, gifts left in a Will to trustees for general charitable purposes at their discretion no longer automatically qualify for the IHT exemption.

Outright gifts to a named, qualifying charity still do, so. If your Will currently gives your executors discretion over charitable gifts, it may be worth reviewing the wording.

Helping you plan for the future

If you would like to discuss how charitable giving could fit into your estate plan, please get in touch with our team.