Leaving a gift in your Will



Inheritance Tax

Any gift, large or small, helps the many veterans in our care. However, a gift to Combat Stress could also reduce the Inheritance Tax on your estate.

Your beneficiaries will only have to pay Inheritance Tax if your estate is over a certain value.

Your estate could include any property you own, stocks and shares, pensions, insurance policies, annual service benefits, PEPs/ISAs and savings accounts.

The Chancellor sets the levels at which Inheritance Tax will be applied (currently 40%, even if you only ever paid basic rate income tax before). From 6 April 2009 the threshold for Inheritance Tax rose to £325,000 for individuals. 40% will be deducted from the portion of your estate that is over the threshold.

Married couples and members of civil partnerships are able to transfer any unused allowance to a spouse or partner so that they can leave up to £650,000 before death duties are due.

You may think that if you add up your investments and savings and the sum is less than £325,000 that Inheritance Tax isn’t going to affect you. But beware, your estate also includes the value of your home – not what you paid for it, perhaps decades ago - but the full market value at today’s prices. In fact, about 40,000 estates every year are subject to Inheritance Tax.

Most people do not realise that Inheritance Tax can also apply to large gifts you make up to seven years before your death. However, any gift made to your spouse or civil partner or to a charity you care about, is free of tax.

Such gifts are deducted from your estate before Inheritance Tax is calculated. So if these gifts reduce the value of your estate to below the threshold it should no longer be liable for any Inheritance Tax.

On estates over £325,000 where no legacy is left to charity, Inheritance Tax is charged at the full rate of 40% where it is not left to a spouse or civil partner and does not qualify for any other relief or exemption.

However, if your estate is above this level and at least 10% is left to charity, Inheritance Tax is charged at the reduced rate of 36%.

The 10% can be made up of smaller gifts to multiple charities, as long as it adds up to 10% of your estate.

To find out more visit www.legacy10.com or www.hmrc.gov.uk/inheritancetax

All figures correct at time of printing, August 2014.