28 November 2018
REMEMBER A CHARITY WELCOMES RECOMMENDATIONS TO SIMPLIFY INHERITANCE TAX
27 NOVEMBER 2018 – Remember A Charity welcomes the first report from the Office of Tax Simplification (OTS) issued as part of the national review of Inheritance Tax (IHT). Charitable gifts in wills are currently exempt from Inheritance Tax (charged at 40%) and those that donate over 10% of their estate to charity benefit from a discounted rate of 36% across the remaining value of their estate.
Rob Cope, director of Remember A Charity, comments: “The current fiscal incentives have proved to be a powerful driver encouraging people to consider the option of donating when writing their will. If current giving levels continue, over the next five years over 10,000 estates will likely benefit from this reduced rate of tax, generating millions in legacy income.
“Legacy giving is becoming more commonplace and, with an increase in the number of estates liable to Inheritance Tax, it is critical that any changes protect the market and continue to enable and inspire the public to support the good causes they care about.”
Published on Friday 23rd November, the report focuses on the administration of the tax, rather than how inheritance tax is to be structured going forward. Referencing Inheritance Tax as both ‘unpopular’ and ‘complicated’, the OTS recommends that Government should implement a fully integrated digital system for Inheritance Tax and probate applications, simplifying the administration of estates. The OTS also observes that ‘regulating the will writing market would help improve the administration process.’
Cope adds: “Ultimately, a more straight-forward Inheritance Tax system should make it easier for people’s estates to be handled promptly, efficiently and for relevant discounts or exemptions on charitable wills to be applied. We welcome steps to reduce the administrative burden for everyone; the public, professional advisers and executors, which of course includes many charities too.
“The current lack of regulation in the will-writing marketplace has seen growing disparity in the way that wills are written and an increase in disputes over charitable estates. With this in mind, the need for clear and consistent processes has never been greater. The public needs to have choice about who and what they support from their will and the confidence to ensure that their final wishes will indeed be met.
“With both the national Inheritance Tax structure and will-writing framework currently under review, the devil will be in the detail of future announcements as to whether the fiscal incentives will be maintained and how will-writing processes may evolve. We continue to appeal to government representatives to ensure that any changes will continue to encourage and promote charitable legacies.”
Remember A Charity recently stated that, together with the Institute of Fundraising and supported by ACEVO, NCVO, ILM and STEP, it had written to government calling for a discount or exemption on probate fees for charitable wills.
Gifts in wills contribute the largest single source of voluntary income to the charity sector, generating around £3 billion for good causes each year.