Inhertiance Tax

Question 1

Substantial legacies to charity

How much must someone leave to charity in order to benefit from the reduced rate of IHT? And what is the rate?

Answer 1

Reduced rate of 36% IHT on death tax instead of 40% standard rate
Applies where: total charitable legacies on death is greater than 10% of the baseline amount

Baseline amount = taxable estate plus charitable legacies plus residence nil rate band (£175,000)

Question 2

What is a deed of variation used for?

Answer 2

To change the distribution of assets on the will

A deed of variation can be used to increase a charitable legacy to benefit from the 36% rate

Must be in writing within 2 years of the death
All beneficiaries must agree