Ensuring your charitable objectives can be achieved in your Will

Charitable giving can be a useful part of estate planning, both as an effective way of supporting causes that matter to you and, in some cases, reducing the inheritance tax (IHT) payable on your estate on your death.

Generally, IHT is charged at 40% on the value of an estate above the available nil rate band allowances. Qualifying charitable gifts are exempt from IHT and, if a person leaves at least 10% of their net estate to qualifying charities, the rate of IHT on the remainder of the estate may be reduced to 36%.

If your Will includes a charitable legacy, or you are considering making a lifetime gift for charitable purposes, recent changes to IHT rules may affect whether a gift described as being ‘for charitable purposes’ qualifies for the charity exemption in full going forward. The position will depend on the wording of the provisions in your Will and the status of the recipient organisation or trust.

New legislation took effect for lifetime transfers made on or after 26 November 2025 and, for testamentary gifts, where the death occurs on or after 6 April 2026. If your Will includes a charitable legacy, it is sensible to review it to ensure it still achieves any intended tax outcome.

Why this matters for your estate planning

Previously, the rules were more flexible. A testator could include a provision within the terms of their Will for a gift to be left on trust for charitable purposes at the discretion of the trustees which would qualify for the IHT exemption. Under the new rules, the definition of “charity” for IHT purposes has been tightened. As a result, gifts to general charitable trusts or gifts expressed simply as being for charitable purposes, may no longer qualify for the IHT relief.

However, where appropriate powers are included in the Will, executors may instead be able to appoint funds to a qualifying charity for UK tax purposes within two years of death, as explained below.

What is a qualifying “charity”?

Under the new rules, to qualify for the charity exemption, the recipient organisation or trust which benefits under an individual’s Will, either on the face of the Will, or by appointment by the executors within 2 years, must fall within the statutory definition of “charity” in Schedule 6 of the Finance Act 2010. Broadly, this means it must:

• be established for charitable purposes only (pursuant to s3(1) Charities Act 2011) and must be for the public benefit;
• comply with any requirement to register with the Charity Commission or, outside England and Wales, the relevant equivalent regulator; and
• be subject to the control of a relevant UK court, as well as satisfying the registration and management conditions (pursuant to Schedule 6 Finance Act 2010).

The two-year window

Where your Will provides your executors with the necessary powers, they may be able to make an appointment out of your estate to a qualifying charity within two years of your death. If dealt with correctly, that appointment can effectively be ‘read back’ as having been made under the terms of your Will, allowing your estate to benefit from the IHT charity exemption.

Your executors will need to take active steps within the two-year period and may need advice on how to do so. It is therefore important that your Will contains appropriate powers and that your executors understand the steps required to preserve the intended tax treatment.

How we can help

If you would like advice on reviewing the provisions in your Will, making a charitable lifetime gift, or assessing whether an organisation or trust qualifies for the IHT charity exemption, please contact our personal tax and succession team or charities team.