Page 9 - Millfield Foundation - Legacy

TAX-EFFICIENT GIVING

The Millfield Foundation is a registered leaving 10% or more of their taxable estate
charity (charity number 1121630) and to charity may qualify for a reduced rate of
accordingly all legacies made to the Millfield inheritance tax from 40% to 36%.
Foundation are currently exempt from UK
Inheritance and Capital Gains Taxes. Capital gains tax:
This type of tax is usually payable if you sell
Inheritance Tax: or give away something that has increased
Under current law, if your estate is worth in value during the time you owned it. The
more than £325,000, your beneficiaries will increase in value is what is taxable. When
have to pay 40% of the part of it that’s over someone dies the value of the assets they
the threshold to HMRC. So, if your estate is own is re-established and any gains that arise
worth £500,000, £175,000 of it is liable for during the administration of the estate (i.e.
inheritance tax, and your beneficiaries must between death and sale) may be liable to
pay £70,000 (40% of £175,000) to HMRC. capital gains tax.
What if you leave money to charity?: Charities are exempt from capital gains tax,
There are two ways leaving a gift to charity so where charities are beneficiaries in a Will,
can help reduce your inheritance tax bill. it may be possible to use this exemption to
benefit the whole estate. Please contact your
If you leave gifts to charity in your Will, solicitor to discuss this further.
the gift value won’t be counted towards
inheritance tax, this could therefor reduce By way of example, if a UK testator has an
the amount your beneficiaries have to pay estate of £500,000, a donation of £17,500
or remove your inheritance tax liability would only diminishes the remaining estate
altogether. by £4,200.*

In April 2012, inheritance tax legislation
changed, meaning in some situations, anyone

Without Charitable Bequest With 10% Charitable Request
Gross Estate £500,000 £500,000
Less Nil Rate Band (£325,000) (£325,000)
Net Estate £175,000 £175,000
Charitable Donation Nil £17,500
Taxable Estate £175,000 £157,500
Inheritance Tax £70,000 @ 40% £56,700 @ 36%
Available for Distribution £430,000 £425,800
Net reduction after £4,200
charitable donation

*Correct at time of publication. More information is available from HMRC website.