A new incentive for charitable legacies which also qualifies for tax relief has prompted The Society of Trust and Estate Practitioners (STEP) to draft a model clause.
In response to HMRC’s consultation document, A new incentive for charitable legacies, the proposed draft model clause could be adopted in the Wills of those wishing to leave a legacy and so qualify for relief.
HMRC’s consultation document is proposing a reduced rate of Inheritance Tax (IHT) where there is a charitable legacy of 10% of the estate left in a will.
Keith Johnston, Director of Philanthropy at STEP explains the current dilemma for benefactors.
“One of the major challenges of this new policy is the inherent difficulty for individuals, possibly years in advance of their death, to know how much they would need to leave to charity in order to qualify for the relief. The STEP model
clause seeks to overcome these problems and to encourage charitable giving.”
STEP has expressed concerns about the complexity of the proposed relief while applauding the strategic aim of the policy.
It has pointed out that to introduce a new, and possibly complex relief, runs counter to the policy being taken forward by the Office of Tax Simplification in rationalising and abolishing reliefs.
This new proposed model clause is drafted as a pecuniary legacy that can be satisfied by the appropriation of assets.
The model clause is currently in draft and will be reviewed once the exact terms of the legislation are published.
Pain thresholds key
To communicate equity release's wider opportunities and benefits, writes Chris Flowers, providers and advisers need to think about how best to engage not only its usual target audience but also their families
What made financial headlines over the weekend?
Havensrock Thrive App
Don’t ‘leave it all on the pitch’