One of the “surprises” of the 2011 Budget was the announcement that the Government intended to reward those who leave money to charity after their death. Effectively the Inheritance Tax Charitable Relief scheme allowed those leaving 10% of their estate to charity would receive tax relief of the equivalent amount.
The consultation process aimed at refining the details of how this scheme would operate in practice is now under way with suggestions abounding. Two such have come from HMRC spokesman Richard Kent this week. The first is that the legislation may require a set clause to be inserted into the will of those wanting to leave a bequest under this arrangement. Richard believes that such a clause would remove the difficulties which may arise when the value of an estate moves substantially from the amount predicted when the will is drawn up as well as arguments on whether the 10% is calculated before or after fixed sum legacies.
However, Mr Kent also warns that the legislation may have a detrimental effect on the overall level of charitable giving. With 10% being the optimum amount to leave, whilst those who may have left less than this percentage might be encouraged to increase their giving, those previously intending to leave more to charity might be tempted to leave less.
With HMRC already investigating the values placed on estates as well as getting tough on the “gifts within seven years of death” rule, those contemplating drawing up a will need to take extra care to maximise legitimate tax reduction opportunities which may be available to them. As tax mitigation specialists Newshams are able to give advice on Inheritance Tax and other taxes, how tax may affect any private or business transaction and how to put in place an effective Inheritance Tax strategy.
Contact us now on 020 7470 8820 and ask to speak to a tax adviser about how we can reduce your tax costs or e-mail us at firstname.lastname@example.org and we’ll get straight back to you.
28th June 2011