Are gifts to charity in a will taxed?
No. A gift that becomes the property of a charity or a registered community amateur sports club is exempt from inheritance tax, with no upper limit (Inheritance Tax Act 1984, section 23; GOV.UK: how inheritance tax works). The gift comes off the estate before the tax is worked out, so it reduces the bill as well as helping the charity.
The rule was tightened for deaths from 6 April 2026: property must now pass to a charity itself. Property that is merely held on trust for charitable purposes, without becoming a charity’s property, no longer qualifies (Finance Act 2026, section 78). Naming a registered charity avoids that problem.
How much does a gift to charity cost the family?
Less than its face value when the estate is above its allowances. Each £1 left to charity is £1 less of taxable estate, so at 40% a £10,000 gift reduces the tax by £4,000 and the other beneficiaries receive £6,000 less. If the estate is within its allowances, there is no tax saving and the gift costs the family its full value.
HMRC’s own example uses an estate worth £750,000 after debts, with the £325,000 nil-rate band and no residence nil-rate band (HMRC manual IHTM45010). We have added the no-gift and minimum-gift rows using the same rules:
| Gift to charity | Rate | Inheritance tax | Left for family |
|---|---|---|---|
| None | 40% | £170,000 | £580,000 |
| £42,500 (10% of the £425,000 baseline) | 36% | £137,700 | £569,800 |
| £50,000 (HMRC’s example) | 36% | £135,000 | £565,000 |
In this example a £50,000 gift to charity reduces the family’s share by £15,000, because the tax falls by £35,000. The inheritance tax calculator runs the same test on your own figures and shows the gift needed for the 36% rate.
How does the 36% rate work?
The reduced rate applies when the “donated amount” is at least 10% of the “baseline amount” (HMRC manual IHTM45009). GOV.UK calls this leaving 10% of the net value to charity, but the calculation is specific:
- Take the value of the estate after exemptions and reliefs. The charity gift is deducted at this step, because it is exempt.
- Deduct the available nil-rate band, including any transferred from a late spouse and less any used by lifetime gifts. Do not deduct the residence nil-rate band.
- Add back the charity gift. The result is the baseline amount.
- If the charity gifts are at least 10% of that, the tax on that part of the estate is charged at 36%.
Because the residence nil-rate band is not deducted, an estate that uses it needs a larger gift, relative to its tax bill, to reach 10%. Estates with jointly owned or trust assets are tested in separate “components” unless an election merges them. Executors claim the rate on schedule IHT430 with form IHT400, and HMRC’s reduced rate calculator works out the gift needed.
Should you leave a fixed sum, a share of the residue or a 10% clause?
- A fixed cash gift is simple and certain. Inflation erodes it over the years and it may not reach 10% of the baseline as the estate grows, so review it when you review your will.
- A share of the residue, such as 10% of what is left after other gifts, grows and shrinks with the estate. See what a residuary estate is. A share of the residue is not automatically the same as 10% of the baseline amount.
- A formula clause sets the gift at whatever amount is needed to meet the 10% test. HMRC accepts suitably worded clauses and publishes the wording it expects (HMRC manual IHTM45008). This is a drafting job for a solicitor.
SwiftWill’s automated will can leave a cash sum or a specific item to a named charity, recording its registered number. It does not include the 10% formula clause and does not check whether your gifts meet the 36% test. Inheritance tax planning, including sizing charity gifts to reach the reduced rate, needs individual advice.
How should you name a charity in a will?
Use the charity’s full registered name, its registered charity number and its address. Charities share similar names, merge and occasionally close, and the number removes doubt. Check the details on the Charity Commission register for charities in England and Wales. A solicitor-drafted will often adds wording that passes the gift to a successor organisation if the named charity has merged, so a reorganisation does not cause the gift to fail.
If you want to leave guidance about how the money is used, a letter of wishes can explain it without making the gift conditional. A gift that depends on conditions may not qualify for the exemption. If you would also like mourners to give to the charity instead of sending flowers, say so in your funeral wishes; FuneralFinder explains how families arrange donations in memory.
Can family redirect an inheritance to charity after a death?
Yes. Beneficiaries can give some of their inheritance to charity by a deed of variation made within two years of the death. If the deed contains the required statement, it is treated as a gift by the person who died, so it is exempt and can count towards the 10% test. The charity must be notified of the deed (Inheritance Tax Act 1984, section 142).
Can family challenge a gift to charity?
You are free to leave your estate as you choose, but some people can ask the court for reasonable financial provision if the will does not make it: a spouse or civil partner, a former spouse or civil partner who has not remarried or formed a new civil partnership, a child, someone you treated as a child of your family, someone who lived with you as a partner for the two years before your death, and anyone you were maintaining (Inheritance (Provision for Family and Dependants) Act 1975, section 1). If a large charity gift would leave a dependant short, speak to a solicitor before signing. See can I disinherit someone?
How do you add a charity gift to your will?
A charity gift needs nothing more than a properly signed and witnessed will. You can make a will with SwiftWill for £35, including specific gifts to charities, and update it later at no charge. If you already have a will, adding a charity means making a new will or a codicil: see changing your will. Use a solicitor if you want the 10% formula clause, a share of a large estate sized for the 36% rate, or a gift that could be disputed. Our inheritance tax guide explains the wider rules.
Sources
- GOV.UK: how inheritance tax works
- Inheritance Tax Act 1984, section 23 (gifts to charities)
- Finance Act 2026, section 78 (scope of the charity exemption)
- HMRC manual IHTM45001 to IHTM45010 (reduced rate for gifts to charity)
- GOV.UK: inheritance tax reduced rate calculator
- Inheritance Tax Act 1984, section 142 (variations)
- Inheritance (Provision for Family and Dependants) Act 1975, section 1
- Charity Commission: register of charities
Sources checked 24 September 2026.