How it works
How does the GOOD GIVE work?
In simple terms, to benefit from the lower rate of Inheritance Tax you need to donate 10% of the value of your “taxable estate” to charity. Your “taxable estate” is the value of your estate AFTER all your Inheritance Tax allowances are taken into account.
At first glance, this may seem like a big charitable donation that would lead to a dramatic reduction in the amount you leave to your loved ones but when it is offset by the lower tax rate, the picture looks very different.
Example one
Married with £3m estate
Suppose you are married, and your joint estate – your marital home, your savings and any other taxable assets – is worth £3m. If you die before your spouse or civil partner, your entire estate would typically pass to them tax free. When they die, and your inheritance tax allowances are considered, the value of your joint “taxable estate” would typically drop to £2.35m and your Inheritance Tax bill would be £940,000. This means your beneficiaries would receive just over £2.06m.
But if you left £235,000 to charity (10% of £2.35 million) your “taxable estate” would become smaller AND your Inheritance Tax rate would drop from 40% to 36%. This would give you a tax saving of almost £180,000.
The beneficiaries of your will – your children, relatives or any other beneficiaries – would receive a little less (£2m instead of £2.06m) but your chosen charity or charities would benefit to the tune of almost a quarter of a million pounds. What a wonderful legacy to leave to future generations!
By opting for the Good Give, your nominated charities receive £235,000 and your inheritance tax bill is reduced by almost £180,000.
Example two
Single with £5m estate
Or suppose you are single, have never married, and your estate is worth £5m.
When you die, and your Inheritance Tax free allowances are taken into account, the value of your “taxable estate” would typically drop to £4.675m and your Inheritance Tax bill would be £1.87m. This means your beneficiaries would receive just over £3.13m.
But if you left £467,500 to charity (10% of £4.675 million) your “taxable estate” would become smaller AND your Inheritance Tax rate would drop from 40% to 36%. This would give you a tax saving of almost £356,000.
The beneficiaries of your will would receive a little less (£3.02m instead of £3.13m) but your chosen charity or charities would benefit to the tune of almost half a million pounds. What a wonderful legacy to leave to future generations!
By opting for the Good Give, your nominated charities receive almost £467,500 and your inheritance tax bill is reduced by over £350,000.
We all have a duty to leave the world a better place than we found it. Show your commitment & talk to your financial adviser, your accountant or your legal adviser.