UK families saved £1.28 billion in inheritance tax last year by leaving money to charity in their wills, according to analysis by TWM Solicitors.
Figures published by the government earlier this year show the annual amount saved on inheritance tax through charitable gifts has surged 88 per cent over the past six years. Law firm TWM Solicitors said people are leaving larger gifts to cut their tax bills as well as for personal and philanthropic reasons.
Money left to charitable causes is exempt from inheritance tax. In addition, estates can qualify for a reduced overall inheritance tax rate of 36 per cent, down from the standard 40 per cent, if at least 10 per cent of the net estate liable for tax is bequeathed to charity.
Inheritance tax is currently levied at 40 per cent on assets above thresholds starting at £325,000 per person, or £500,000 when a home is left to direct descendants. Couples can double those thresholds because transfers between spouses are exempt from tax. Currently, around 4 to 5 per cent of estates pay death duties, but that proportion is expected to rise to 7 per cent when unspent pensions become subject to inheritance tax starting in April 2027.
According to figures from TWM Solicitors, £1.22 billion was saved in the 2025-26 tax year on direct gifts to charities and property held in trust for charitable reasons. A further £55 million was saved by estates taking advantage of the rate reduction to 36 per cent.
Charitable giving and pension changes
Gillian Dunlea, managing associate at TWM Solicitors, noted that growing numbers of clients are looking at charitable bequests to manage estate tax liabilities. "Some people are understandably concerned about the level of inheritance tax payable on their estates, and charitable giving can appeal because gifts to charity are free from IHT," Dunlea said.
Dunlea advised individuals to review their financial arrangements ahead of upcoming rule changes. "With pensions being subject to IHT from 2027, pensions may become less tax efficient for families to inherit, so clients should review their pension nominations alongside their wills, particularly where they intend to make charitable gifts as part of overall estate planning," she said.
Dunlea added that many donors prefer giving through a will rather than during their lifetime to protect their own finances. "Many people prefer to leave charitable gifts in their will rather than during their lifetime where they are concerned about future care costs or retaining enough income in later life," she said.
She noted that gifting through wills has also risen as beneficiaries, generally children or even grandchildren, are increasingly grown up and financially independent.
Lifetime giving versus will bequests
Ian Dyall, head of estate planning at wealth management firm Evelyn Partners, urged taxpayers to check whether existing charitable gifts qualify for the lower tax rate. "If you are already making significant gifts to charity in your will it is probably worth checking whether they will qualify for the reduced 36 per cent inheritance tax rate," Dyall said.
Dyall explained that in some cases, a small increase in the gift to charity will mean that both the charity and your beneficiaries inherit more, because the reduction in inheritance tax more than covers the additional amount gifted to charity. He noted that Evelyn Partners has even done this following a person's death using a deed of variation to amend the original charitable gift.
Comparing lifetime donations to gifts made on death, Dyall said donors must weigh the tax advantages of each approach. "If you do wish to make a gift to charity then you need to decide whether it is better to make that gift during life or via your will on death," Dyall said. "Gifts during lifetime benefit from Gift Aid which can help reduce your income tax liability, whereas significant gifts via your will can help secure the reduced inheritance tax rate on all the assets in your estate."
Avoiding scams and protecting estates
Financial and legal experts emphasize that anyone planning to leave money to charity to reduce inheritance tax should seek professional advice to ensure their will is structured properly and in line with their wishes. Taxpayers are also warned to beware fake charity will schemes run by fraudsters.
MoneyHelper, the government-backed impartial money website, warned that scammers pretend to be from a charity and offer free or discounted will-writing services. "The aim is usually to pressure you into leaving money to their fake charity, steal your personal and financial details, or charge hidden fees," MoneyHelper stated, adding that sometimes the charity does not exist at all, or the will created isn't legally valid.
MoneyHelper explains that many charities run genuine, free will schemes, so it is worth checking directly with a charity you trust. Experts emphasize that it is always best to make a will to ensure assets are distributed as intended, rather than according to the rules of intestacy which apply otherwise.
Solicitors are trained to draw up wills correctly and are regulated by the Solicitors Regulation Authority, providing protection if things go wrong. While will writing services are typically cheaper than solicitors, MoneyHelper advises consumers to check what to look for to ensure providers are trustworthy and transparent.
MoneyHelper says if consumers use a will-writing service, they should choose one that is a member of the following organisations:
- The Society of Trust and Estate Practitioners
- The Institute of Professional Will Writers
- The Society of Will Writers
- Society of Later Life Advisers
