Leaving money to charity: can it save your family tax?
Leave at least 10% of your estate above the tax-free amount to charity and the tax on the rest drops from 40% to 36%, so your family gives up much less than the charity gets.
Your answer
Enter what you own to see what a gift to charity costs your family.
About this calculator
For anyone writing or changing a will who wants to leave something to charity and to know how much less their family would get.
What happens to your answers
We don’t keep them. Your answers go to our server to do the sums and aren’t stored or logged. If you copy a link to your answers, they’re in the link itself, so only share it with people you trust.
How it’s worked out
Gifts to charity in your will are free of inheritance tax. On top of that, if at least 10% of your estate goes to charity, the rest is taxed at 36% instead of 40% (the reduced rate). The 10% is measured against HMRC's baseline amount: everything you own after debts, less the tax-free amount (nil-rate band), with the gift added back. The extra home allowance (residence nil-rate band) still lowers the tax, but it doesn't come off the baseline. We work out the tax and what your family receives with no gift, with your gift, and with the smallest gift that gets 36%.
Worked example
Leaving £50,000 to charity costs your family only £15,000, because the tax drops by £35,000.
Death this tax year · £50,000 to charity · home not to children or grandchildren · no allowances passed on · everything else to family
| Everything you own, after debts | £750,000 |
|---|---|
| Tax-free amount | £325,000 |
| With no gift to charity: tax at 40% on £425,000 | £170,000 |
| Your family receives | £580,000 |
| Your gift to charity | £50,000 |
| Step 1: everything you own less the gift | £700,000 |
| Step 2: less the tax-free amount (the home allowance doesn't come off here) | £375,000 |
| Step 3: plus the gift back (the baseline amount) | £425,000 |
| 10% of that: the gift needed for the lower rate | £42,500 |
| Tax at 36% on £375,000 (the gift passes the 10% test) | £135,000 |
| Your family receives (£750,000 − £135,000 tax − £50,000 gift) | £565,000 |
| The smallest gift that gets the lower rate | £42,500 |
| Your family would receive, with that gift, after 36% tax of £137,700 | £569,800 |
Worked out using HMRC's baseline amount method (Inheritance Tax Manual IHTM45009) and this tax year's inheritance tax thresholds.
Questions people ask
Does my family get less if I leave money to charity?
Usually a little less, but much less than the charity gets. At the 36% rate, every £100 to charity costs your family from about £24, and more if your home allowance is large. And if you'd leave a smaller gift anyway, going up to 10% can cost them nothing more: we show you the figure.
What if my estate changes and the gift drops below 10%?
Then the estate pays the full 40%. Many wills avoid that by leaving a share worded to always meet the 10% test, rather than a fixed sum. Your solicitor can use HMRC's model wording.
Does a gift to any good cause count?
It has to go to a UK charity or community amateur sports club. Gifts to people, or to causes that aren't charities, don't count.
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