HMRC has released guidance on the new reduced rate of inheritance tax available to estates which leave a ten per cent donation to a registered charity.
Currently, estates worth over £325,000 are liable to pay inheritance tax at a rate of 40 per cent, however, as of the 6 April 2012 estates leaving 10 per cent to charity may pay a reduced rate of 36 per cent.
HMRC has stated that in order to qualify for the reduced inheritance tax rate, individuals must leave at least 10 per cent of the net value of an estate to a qualifying charity, and have outlined the following points:
According to calculations by the Telegraph, the move is to cost the Treasury £25 million for the tax year 2012/13, although it is hoped that charities will receive an additional £300 million over the coming three years.
HMRC is also currently altering the way charitable donations are claimed through Gift Aid by reducing the amount of required paper work for smaller donations.
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