HM Revenue & Customs (HMRC) has forecast that a new standard wills clause is likely to be brought in to regulate the new reductions in inheritance tax for people who leave certain proportions of the estates to charity.
The new law means that if you leave 10 per cent of your estate to charity, there will be 10 per cent less tax on the remainder. The initiative was announced in the March Budget and comes into effect next April, pending a consultation by the Treasury that lasts until the end of August.
"The expectation is that it's going to require some kind of formulaic clause people can insert into wills so that they can be confident their estate will benefit," said Richard Kent, one of HMRC’s senior advisers on tax policy, at a talk on philanthropy yesterday. He felt that the clause will also be needed due to the possibility of an estate’s value rising or falling between when the will is written and the time of death.
Owen Clutton, part of the Society of Trust and Estate Practitioners, offered his idea of such a clause - naming the charity personally and then allowing one’s executors to donate 10 per cent of the estate in the form of assets not already bequeathed to someone else.
