Leaving a legacy and tax

Baby Omar held by mother, Bakoteh, GambiaWhat about inheritance tax and are there tax benefits to leaving a legacy?

Yes there are tax benefits. Any money left to charity in your will is exempt from Inheritance Tax, so leaving a gift to SOS Children will not only help children in the world's poorest countries, but the money will go further because your gift will be tax free.

The Inheritance Tax threshold or nil rate band for the 2012-2013 tax year is £325,000 and will remain so until 2014-15.  If the total value of your estate is over £325,000, any beneficiaries other than charities will have to pay 40% inheritance tax on the amount over £325,000. Since April 2012 if you leave 10% or more of your net estate to charity the tax due may be paid at a reduced rate of 36 per cent instead of 40 per cent.

Each individual's tax situation is different, and we always recommend consulting with your solicitor when making any changes to your will. For more information about inheritance tax, please go to www.hmrc.gov.uk or call HM Revenue and Customs on 0845 302 0900.

How much inheritance tax will I have to pay?

If the total value of your estate is over £325,000, your beneficiaries will have to pay 40% inheritance tax on the amount over £325,000, unless you have left 10% or more of the net estate to charity.

This table shows an example of how much tax they would pay at current rates with and without a charitable gift of £10,000:

Net value of your estate
Tax payable without charitable donation Remaining value of your estate
 Tax payable after gift of £10,000 in will
 Remaining value of your estate after charitable gift of £10,000
£400,000
 £30,000
 £370,000
 £23,400
 £366,600

What if my circumstances change?

One of the positive aspects of leaving a gift to SOS Children in your will is that it can be worded to take into account any changes to your personal circumstances. With a properly worded will you can be safe in the knowledge that should your circumstances change, it automatically takes account of this, so you are able to look after yourself, friends and family while also knowing that you will still be doing something for your favourite charity.

Where can I find out more?

If you would like us to help in any way with the specific wording of a legacy to SOS Children, please call us on 01223 365589 or email legacy@soschildren.org. You can also contact us on 01223 365589.