Leaving a gift in your Will

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Inheritance Tax


Your legacy … helping rebuild lives

What does inheritance tax mean for you?

If you are leaving your estate to your spouse or civil partner, you can pass this on without having to pay inheritance tax.  This is because gifts between husband and wife or civil partner aren’t subject to this tax.

However, if you own your own home, you don’t plan to leave it solely to your partner, and it’s worth more than £325,000, it’s possible your estate might be liable for inheritance tax *

The default threshold for estates before they attract inheritance tax is £325,000 per person.

Right now, inheritance tax is set at a standard 40%, however you can reduce this to 36%.  If you leave a gift in your Will to Combat Stress and it’s 10% or more of your net estate, you can reduce your potential inheritance tax liability from 40% to 36%. 

How does it work?

Firstly, any gift you leave to Combat Stress it won’t count towards the total taxable value of your estate.  This is called a “charitable legacy” … a gift in your Will.

To illustrate how this would work:

  • Your net estate is worth £425,000
  • You leave this to your partner, you are not married or in a civil partnership
  • On the £325,000 default position, you would be liable for £100,000 taxable assets
  • So, your estate would potentially have to pay a tax bill of £40,000 (ie: 40% of £100,000) leaving £385,000 to your beneficiaries 

 

But if you wanted to reduce the tax bill by leaving a charitable gift to Combat Stress:

  • To qualify for a reduction from 40% to 36% Inheritance tax you must donate 10% of your taxable liability, in this case £10,000 of the £100,000 to Charity.
  • Your net estate is now worth £415,000
  • Thus, the ‘net estate’ liable for Inheritance Tax is £90,000 (i.e. £415,000 minus £325,000) but is now taxable at a rate of 36% NOT 40%
  • Your estate would now pay 36% on £90,000 worth of assets instead. This means that your estate would pay£32,400in Inheritance Tax leaving   £382,600 to your beneficiaries

 

Key facts

£325,000 - the estate amount you can pass on without attracting inheritance tax

£625,000 - if you are married or in a civil partnership, this is the estate amount to can pass on without attracting inheritance tax

40% - this is the percentage you pay on your estate if it’s above £325,000 (don’t forget this includes your home)

36% - the percentage you can reduce your inheritance tax liability to if you leave a gift in your Will to Combat Stress when it’s worth more than 10% of your estate

Reasons to make a Will:

It’s so easy to put off making a Will: there are so many immediate things to do.  However, it’s worth bearing in mind some key reasons to make time:

  • It makes it so much easier for your loved ones

Having a Will means that sorting out all the legalities such as closing accounts and dealing with bills is a much smoother process.

  • Your wishes are known and can be carried out

If you put in writing what you want to happen, you know everything is clear.

  • Help to minimise inheritance tax

With a Will, you can help minimise the amount of inheritance tax which your estate could be liable for.

  • Protect your partner

If you aren’t married or in a civil partnership, right now you don’t have the same automatic rights as people who are. You can make sure your partner is looked after by naming them in your Will.

  •  The Crown could end up getting your estate

Without a Will expressing, it is possible your whole estate could end up belonging to the Crown or government.

Ready to find out more?

Legacies are vital to fund the support we provide to veterans. If you would like to find out more, please contact the Legacy Team on 01372 587144 or you can email Sarah Seddon at sarah.seddon@combatstress.org.uk

 

1 in 5 of the veterans we support is helped thanks to the gifts in Wills

 

The work of Combat Stress is as vital today as it was after the First World War when the charity was founded – during the last year the charity had more than 2,000 referrals.  

 

*When thinking about planning your Will, we do recommend that you get professional advice.