Chapter: 2 - Inheritance Tax Mitigation: The Basics

The charities exemption

2.2.8

This exemption applies to gifts on death just as to lifetime gifts (IHTA 1984 s23).  However, one advantage of lifetime gifts of course is the possibility of Gift Aid Income Tax relief, both basic rate recovery for the charity and higher rate relief for the donor.  See 12.2 and 12.3.  Budget 2011 has proposed that, for deaths on or after 6 April 2012, the current 40% rate will be reduced to 36% where 10% or more of a deceased’s net estate (after deducting IHT exemptions, reliefs and the nil-rate band) is left to charity.  HMRC issued a consultation document on 10 June 2011, for response by 31 August 2011.  See further 12.3.6.