£1.28bn inheritance tax saved by leaving money to charity

Newsletter issue – November 2026

Families saved an estimated £1.28bn in inheritance tax (IHT) by leaving money to charity through their wills. This represents an 88% increase over the past six years. Gifts to charities are exempt from inheritance tax, making them an increasingly popular estate-planning tool.

Assets left to charity are not subject to IHT. If at least 10% of the net taxable estate is left to charity, the IHT rate on the remaining taxable estate falls from 40% to 36%. For 2025-26, around £1.22bn of tax was saved through charitable gifts and charitable trusts, plus a further £55m through the reduced 36% tax rate.

Currently around 4-5% of estates pay inheritance tax. This could rise to about 7% when unused pension funds become subject to IHT from April 2027. Legal and financial advisers suggest people review both their wills and pension nominations in light of these changes. A relatively small increase in a charitable gift can sometimes leave both the charity and the family better off.

With this rise in donations, there also comes the warning about fake charity will-writing schemes. Scammers pretend to be from a charity and offer a free or discounted will-writing service with the aim to pressure you into leaving money to their fake charity, steal your personal and financial details, or charge hidden fees. Sometimes the "charity" doesn't exist at all, or the will they create isn't legally valid. It is recommended to use regulated solicitors or reputable will-writing providers.

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