Charitable Legacy in a Will UK (2026): How to Leave a Gift to Charity and the 10% IHT Discount

Yes — a gift to a qualifying charity in a will is ENTIRELY EXEMPT from inheritance tax (IHTA 1984 s.23): (1) THE CHARITY EXEMPTION (IHTA 1984 s.23): transfers of value to qualifying charities — whether made during lifetime or on death — are wholly exempt from IHT. There is no upper limit on the exemption. A testator can leave their entire estate to charity and no IHT will be payable; (2) WHAT IS A QUALIFYING CHARITY: for the IHTA s.23 exemption to apply, the recipient must be a 'qualifying charity'. This includes: (a) charities established in the UK and registered with the Charity Commission (England and Wales), OSCR (Scotland), or the Charity Commission for Northern Ireland; (b) charities established in EU/EEA member states and meeting the relevant tests; (c) charities established elsewhere that meet the definition in IHTA 1984 s.23(6); (3) THE GIFT MUST BE TO THE CHARITY — NOT A SUBSIDIARY: the gift must be to the charitable entity itself. A gift to a charity's trading subsidiary (which is not itself charitable) does not qualify for the s.23 exemption — the trading subsidiary is a commercial company; (4) CONDITION FOR EXEMPTION — MUST BECOME ENTITLED: the exemption only applies if the charity actually becomes ENTITLED to the gift. If the gift fails (e.g. the charity has ceased to exist) and the gift falls into residue, the exemption is lost. Always include a substitute (fallback) charity or direction to the executor to find a similar charity; (5) GIFT AID DOES NOT APPLY: a legacy in a will is NOT eligible for Gift Aid. Gift Aid applies to lifetime cash donations. A bequest in a will is a different legal act — the charity cannot reclaim income tax on a charitable bequest.

The 10% rule under IHTA 1984 s.24A (and Schedule 1A, inserted by Finance Act 2012 s.209) reduces the rate of IHT on the taxable estate from 40% to 36% where at least 10% of the NET ESTATE is left to charity: (1) THE BASIC RULE: if the total charitable gifts in the will equal or exceed 10% of the 'baseline amount' (the net estate after deducting the nil-rate band, liabilities, and exemptions but BEFORE applying the charitable gifts themselves), the entire remaining taxable estate is charged at 36% instead of 40%; (2) THE CALCULATION: the baseline amount = gross estate − liabilities − reliefs/exemptions (BPR, APR, spousal) − nil-rate band. The charitable gifts must be at least 10% of this baseline. Example: (a) gross estate: £800,000; (b) liabilities and expenses: £30,000; (c) nil-rate band: £325,000; (d) baseline: £800,000 − £30,000 − £325,000 = £445,000; (e) 10% of baseline: £44,500; (f) if charitable gifts ≥ £44,500, IHT on remaining taxable estate is 36% instead of 40%; (g) IHT saving: the taxable estate (£445,000 − £44,500 = £400,500) is taxed at 36% (= £144,180) instead of 40% (= £178,000) — saving £33,820 in IHT, achieved by a charitable gift of £44,500; (3) THE 'SURVIVOR' PRINCIPLE: the 10% rule applies to each of three 'components' of the estate: (a) survivorship property (jointly owned property passing by survivorship); (b) settled property (trust property); (c) the estate proper. Each component is assessed separately. However, components can be merged (opted into a single computation) to make the 10% test easier to satisfy; (4) OPTING OUT: where a beneficiary would prefer more money over the reduced IHT rate, they can 'opt out' of the 36% rate — causing the standard 40% rate to apply but the non-charitable beneficiaries to receive more.

There are three main types of charitable legacy, each with different characteristics: (1) PECUNIARY LEGACY: a specific fixed sum of money: 'I give the sum of £10,000 to Cancer Research UK (Registered Charity No. 1089464) absolutely'. Advantages: simple; the charity knows exactly what it will receive. Disadvantages: the value is fixed — it does not grow with the estate (and inflation erodes it); if the estate is smaller than expected, specific legacies may exhaust the estate before residue is distributed; (2) SPECIFIC LEGACY: a specific asset (e.g. shares in a company, a painting, jewellery): 'I give my holding of 1,000 shares in XYZ plc to Oxfam (Registered Charity No. 202918) absolutely'. Advantages: the charity receives the precise asset intended. Disadvantages: if the asset no longer exists at death (it has been sold or given away), the gift ADEEMS — it fails and the charity receives nothing; (3) RESIDUARY LEGACY: a share of (or the whole of) the residue after all other gifts have been paid: 'I give 20% of my residuary estate to Macmillan Cancer Support (Registered Charity No. 261017) absolutely'. Advantages: the charity's share grows with the estate; the charity benefits from the estate's overall performance; most efficient for the 10% IHT rule (the charitable share is calculated as a proportion of the residue and automatically hits the 10% threshold if properly calculated). Disadvantages: the charity's amount is unknown until the estate is finalised; (4) DRAFTING BEST PRACTICE: always identify the charity by: (a) full registered name; (b) charity registration number; (c) principal office address. This avoids ambiguity where charities have similar names and protects against a wrong charity receiving the gift. Include a FALLBACK DIRECTION: 'If [charity] shall have ceased to exist, then to such charity with substantially similar objects as my executors shall in their absolute discretion select'.

Incorrectly identifying a charity in a will can cause the gift to fail or go to the wrong organisation: (1) COMMON IDENTIFICATION ERRORS: (a) WRONG NAME: many charities have similar trading names versus registered names. 'Cancer Research UK' is correct; 'Cancer Research' alone is ambiguous (multiple organisations). Always use the full registered name; (b) NAME CHANGE: charities sometimes change their registered name — particularly after mergers. If the will uses an old name, the charity can still claim if it is identifiable as the same organisation; (c) DISSOLVED CHARITY: if the charity has been wound up and dissolved, the gift may lapse and fall into residue. A fallback direction prevents this; (2) REGISTERED CHARITY NUMBER: always include the Charity Commission registration number. This is the definitive identifier: (a) England and Wales: Charity Commission registration number; (b) Scotland: OSCR number (SC prefix); (c) Northern Ireland: CCNI number (NI prefix); (3) OVERSEAS CHARITIES: gifts to charities established outside the UK, EU, and EEA may not qualify for the IHTA s.23 exemption — verify the charity's status. A gift to a US 501(c)(3) charity may not attract IHT exemption in the UK; (4) UNINCORPORATED ASSOCIATIONS VS CHARITIES: many community groups, local clubs, and sports societies are not registered charities. A gift to an unincorporated association that is not a registered charity does NOT attract the s.23 IHT exemption. Check the Charity Commission register at register-of-charities.charitycommission.gov.uk before naming the recipient in the will; (5) FALLBACK CLAUSE: always include a fallback direction in case the named charity has: (a) ceased to exist; (b) ceased to be charitable; (c) merged with another charity under a different name. The fallback clause gives the executor discretion to identify a successor or substitute charity with the same objects.

The practical process for leaving a charitable legacy involves several steps: (1) CHOOSING THE CHARITY: decide which charity or charities to benefit and in what proportions or amounts. Consider: (a) charities you have supported during your lifetime; (b) charities working in areas personally important to you; (c) whether you want a pecuniary legacy (fixed sum), specific legacy, or residuary share; (2) NOTIFYING THE CHARITY (OPTIONAL BUT RECOMMENDED): informing the charity that you intend to leave them a legacy is NOT a legal requirement — but it is good practice because: (a) the charity can include you in its Legacy Society or equivalent; (b) they can contact you if they change their name or registration; (c) it helps them plan future fundraising based on expected legacies. You are under no obligation to leave the legacy — you can change your will at any time; (3) DRAFTING THE LEGACY CLAUSE: include in the will: (a) the type of gift (pecuniary, specific, or residuary); (b) the amount or description of the gift; (c) the full registered name of the charity; (d) the charity registration number; (e) the principal registered address; (f) a fallback direction for dissolved/successor charities; (4) EXECUTOR'S RESPONSIBILITIES ON DEATH: the executor must: (a) notify the charity of the bequest; (b) obtain a certificate of exemption from IHT from the charity or evidence of charitable registration; (c) pay the legacy from the estate in due course; (d) obtain a receipt from the charity; (e) for the 10% rule: calculate the baseline amount and verify that the charitable gifts meet the 10% threshold before applying the 36% rate; (5) HERITAGE ASSETS — CONDITIONAL EXEMPTION: where an estate includes heritage assets (works of art, historic buildings), conditional exemption from IHT may be available instead of, or alongside, charitable giving. These are exempt from IHT conditional on public access and maintenance. This is a distinct regime from the charity exemption.