Meg Saksida explains how to calculate the reduced rate of inheritance tax in basic and more complicated estates.
Charitable donations are popular legacies written into wills. This is for two very good reasons.
Firstly, for gifts made in both lifetime and on death, charitable donations are exempt from inheritance tax (IHT). This means that an unlimited amount can be left to charities from an estate without the burden of IHT. Secondly, if at least 10% of the ‘baseline’ amount of a deceased estate is left to charity (or a registered community amateur sports club) in addition to the exempt gift itself, for any value left chargeable to IHT the rate is lowered by 4% from 40% to 36%.
The baseline amount
The baseline amount is the estate before the charitable donation has been deducted but
