Did you know that by leaving 10% of your estate to a charity, your inheritance tax could be reduced to 36%? Charitable giving and legacy planning involves strategically incorporating philanthropic donations into your estate plan. This enables you to support the causes you care about, while potentially reducing your inheritance tax liability. We look at the different aspects of inheritance planning when it comes to building your legacy.
Financial advice on inheritance
Charitable giving and legacy planning are tax-efficient tools that can ensure your wealth creates a lasting impact by benefiting your family and a cherished cause. Through philanthropic planning, you can ensure more of your wealth helps others, rather than simply being lost to tax. With smart financial planning, you can reduce your inheritance tax, protect your loved ones, and maximise your legacy.
Many people want to give back but are unsure how to do it tax-efficiently or in a way that aligns with their family’s needs. Therefore, it’s important to get accurate financial advice on inheritance. Without efficient inheritance planning, your donations may be less impactful, and your family might face a bigger tax bill than necessary. And this eroded wealth could have been used to support your loved ones or a charity.
What are the tax benefits of charitable giving?
Below is a list of tax advantages when you either make donations or include charitable gifts in your will:
- Gifts to UK‑registered charities – if you leave 10% or more of your net estate to a charity, this can reduce your estate’s IHT rate from 40% to 36%.
- Lifetime donations using Gift Aid – this can provide tax relief by boosting the value of your contribution, while lowering your tax liability.
- Charitable trusts – these can be set up to manage larger bequests, delivering ongoing tax advantages and support for a good cause.
Why is legacy planning important?
Charitable giving and legacy planning go hand in hand. But philanthropy strategies need to be smart to maximise impact, while ensuring your financial security. One of the simplest ways is to include a charitable bequest in your will. You would specify an amount or a percentage for each chosen charity, or you might decide to give to one organisation.
Choose charities that align with your values and your wealth planning goals, as this will ensure your legacy reflects what matters to you the most. By using a team of professional financial planners, you’ll be able to integrate your philanthropic aspirations into your wealth plan.
Establishing a charitable trust can allow more flexibility and control over how your funds are used. As an example, you might want your legacy to support certain initiatives or ongoing projects. However, it’s important to get advice from a financial planner, so you can structure your donations for maximum benefit while ensuring enough money for your family.
How to balance giving to family and causes
Well-structured legacy planning will ensure both your loved ones and your chosen charities receive support in accordance with your wishes. By taking a careful approach to legacy planning, you can balance gifts to your beneficiaries with meaningful contributions to charity and reduce inheritance tax. If possible, try to encourage open family discussions about your philanthropic intentions to ensure transparency.
Consider the timing of your charitable donations. You could look at making some gifts during your lifetime to enjoy immediate tax benefits and you’ll also see your positive impact first-hand. Although leaving a legacy through your will could help to ensure longer-term support for causes, combining both strategies could maximise your impact.
Wealth Management, Nottingham and Lincoln
Are you considering leaving a gift in your will to a charity? Charitable giving isn’t just about being generous – it’s about smart financial planning. When it’s done well, it means more money for your family, more impact on the causes you believe in, and less cash lost to tax.
At Balance: Wealth Planning, our “making money mean more” ethos helps you align your financial legacy to your values. Our financial planners will help you build and manage your legacy, using tax-efficient methods. We can advise you how to make or include charitable gifts in ways that ensure you can support your family and any important causes.
Talk to us about how to build a giving strategy that supports your family and the causes you care about. Get in touch to speak to our financial planners.
Sources:
https://www.gov.uk/donating-to-charity/leaving-gifts-to-charity-in-your-will
https://www.cafonline.org/insights/research/uk-giving-report
https://www.rememberacharity.org.uk/media/seflc0aj/savanta-summary-report-2025-public-june-2025.pdf
https://www.conceptfinancialplanning.co.uk/2025/07/09/a-guide-to-tax-efficient-charitable-giving/
