Understanding percentage gifts
Did you know that more than 90% of the amount donated to UK charities from people’s Wills comes from percentage or residual gifts rather than donations of a fixed amount?
Contrary to what people might think, leaving a percentage gift to charity needn't be complicated and there can be several advantages – for you and the charity you support.
Here are five reasons why you might choose to consider leaving a gift as a percentage of your estate - although we always advise speaking to a professional solicitor or Will-writer first:
Reduce Inheritance Tax (IHT)
Any gift to charity from your estate is tax-free, but by giving 10% or more of your estate can qualify for a reduced IHT rate (36% instead of 40%). This can make a big difference to your tax bill.
If you leave a residual gift – where you donate what’s left (or a proportion of the estate) after taking care of your family and friends – it’s an easy way to ensure you get your gifts for loved ones in first, with any charitable donations coming in after that.
When people leave a percentage gift or residual amount, the value is typically around 10 times the value of a donation given as a set sum. These donations can be transformative for charities, funding vital services & keeping the cogs turning in tough times. So, for those who want to maximise their impact and shape the world long after they are gone, it can be a special way to go about it.
Monetary values change
The value of money changes over time, particularly with rising inflation, so a percentage gift can help to make sure your loved ones are taken care of, while allocating a small share to good causes. Even 1%, 5% or 10% can go a long way for your favourite charity.
A percentage gift (or share of your estate) can be as small or large as you like. Whatever you decide - set sum or residual amount - it will be hugely valued by whichever charity or charities you choose in your Will.
The key is in getting good professional advice for writing your Will to make sure it meets your needs – allowing you to support your family, loved ones and any good causes exactly as you wish.