Inheritance Tax and the Charity Exemption

This webinar covers inheritance tax (IHT) and its interplay with charitable estates, aimed at all probate practitioners. Research from Legacy Foresight suggests that charitable legacy income will be worth an estimated £4.2bn per year from 2022 to 2026 – showing the importance and impact of understanding how the charity exemption might apply to an estate,

We begin by covering a brief background of IHT and how the charity exemption applies to estates, before exploring how charity exemptions work in an estate administration, including:

• How the ‘10% rule’ (the reduced rate of IHT) works, and spotting opportunities to maximise the estate value for the beneficiaries; and
• Understanding how to calculate the correct split of residue between charitable and chargeable beneficiaries – identifying the right clause, and how to avoid a common trap before distributing.

This is brought to life using real examples, with the opportunity for practitioners to consolidate learning through practical questions and calculations.

Resources:

IHT and Charity Exemption

IHT and Charity Exemption Additional Resource Notes

For Legal Estate accounts September 2022 307926469 1

• Inheritance Tax Reduced Rate Calculatorhttps://www.gov.uk/inheritance-tax-reduced-rate-calculator
• IHTM45000 - Reduced rate for charitable gifts: contents - HMRC internal manual - GOV.UKhttps://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm45000
• IHTM26171 - Step 4 - Re Benham type grossing calculations: legal backgroundhttps://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm26171
• IHTM26172 - Step 4 - Re Benham type grossing calculations: practicehttps://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm26172

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Learning objectives:

By the end of this webinar, you should be able to:

• Recall the basic principles of IHT
• Understand the charity exemption from IHT
• Understand how to calculate whether the reduced rate of IHT applies to an estate – the so-called “10% rule”
• Spot opportunities to maximise charitable bequests within an estate administration
• Understand and identify the difference between a Re Benham and Re Ratcliffe split of residue
• Calculate IHT in a Re Ratcliffe estate and apportion it appropriately.