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Leaving Money to Charity in Your Will (Incl. the 36% Rule)

To leave money to charity in your will, name the charity and its registration number and state the gift — a fixed sum, a share of your estate, or specific items. Gifts to UK charities are free of inheritance tax, and leaving 10% or more of your net estate cuts the rate on the rest from 40% to 36%.

The three types of charitable gift

  • Pecuniary legacy: a fixed sum of money, e.g. £5,000. Simple, but inflation erodes its value over time.
  • Residuary legacy: a percentage or the whole of what’s left after other gifts and costs. Keeps pace with your estate’s value.
  • Specific legacy: a particular item — property, shares, a possession.

Most people leaving a meaningful charitable gift use a residuary legacy, because it holds its value relative to the estate.

How to word it (and why the details matter)

Name the charity in full, include its registered charity number, and state the type of gift clearly. Charity names change and merge, so the number prevents your gift failing or going to the wrong body. Add a clause covering what happens if the charity no longer exists when you die. A solicitor or a qualified will service will get this wording right — it’s a common place DIY wills go wrong.

The tax rules, in plain English

Two facts worth knowing:

  1. Charitable gifts are inheritance-tax-free. Anything you leave to a UK-registered charity is exempt from inheritance tax — it comes off the taxable estate entirely.
  2. The 36% reduced rate. Inheritance tax is normally 40% on the estate above the tax-free threshold. If you leave 10% or more of your net estate to charity, the rate on the remaining taxable estate drops to 36%. The “net estate” is broadly the value after the tax-free allowances. This can mean your family receives more and the charity benefits — HMRC provides a reduced-rate calculator to check.

(Gift Aid applies to donations made during your lifetime, not to gifts in a will — worth knowing, but a separate mechanism.)

These are general points, not tax advice. The 10% calculation and the allowances involved can be intricate, so for anything beyond a straightforward gift, take professional advice.

A quick worked example

If your net estate is £500,000 and the tax-free threshold uses up part of it, leaving at least 10% of the net estate to charity can move the tax on the balance from 40% to 36%. Depending on the figures, the reduction in tax can offset much of the gift’s cost to your other beneficiaries. Use HMRC’s reduced-rate calculator, or ask a solicitor, to model your own numbers.

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  • Disclaimer: General information, not legal or tax advice. Consult a solicitor or tax adviser for your own circumstances.
  • Sources: GOV.UK inheritance tax and reduced-rate calculator pages (link).

Frequently asked questions