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What Charities Pay In Inheritance Tax

what-charities-pay-in-inheritance-taxIf you are a charity and are wondering what charities pay in inheritance tax especially if left money in a will then let us explain.

What charities pay in inheritance tax – explained

We will try and explain as best we can what charities pay in inheritance tax in Edinburgh or indeed Scotland. Some people might think about giving to charity to reduce an Inheritance tax bill. If a decision is made to leave some of or all of an estate to a charity the estate can pay Inheritance tax at a reduced rate of 36% on some assets (instead of 40%) and only if 10% or more of the ‘net value’ of their estate is left to their chosen charity. The net values of an estate are worked out as the total value after deducting reliefs, debts and liabilities, exemptions re anything left to a wife, husband or civil partner anything below the Inheritance Tax threshold of £325,000 (known as the ‘nil rate band’). What charities pay in inheritance tax and when an estate doesn’t have to pay Inheritance tax is when they leave any gifts given to charities, museums, universities or community amateur sports clubs.

Charities that would qualify for a reduced rate are those that have a HM Revenue and Customs (HMRC) charity reference number or a community amateur sports clubs (CASCs). Only components of an estate qulify if the assets in trusts that the deceased person was a beneficiary of (known as the ‘settled component’) or assets the deceased owned or shares of assets they owned jointly and passed to others in their will
Components that only qualify for the reduced rate if they’re merged with other qualifying components are: assets the deceased owned jointly that automatically passed to the other owners after death (known as the ‘survivorship component’) or gifts the deceased continued to benefit from, eg a home they gave away but still lived in (known as ‘gifts with reservation of benefit’).

What charities pay in inheritance tax – getting complicated?

Our experience firm of inheritance tax lawyers in Edinburgh are here to help show you what charities pay in inheritance tax so book a consultation today to deal with an inheritance tax specialist in Edinburgh.


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