David Dunsire: Good deeds getting better for charities and givers

It IS sad, but true – death and taxes are the only two certainties in life that each and every one of us will face at some point.

Although we can’t control the hands of fate when the time comes for us to go, there are ways to help soften the blow while protecting our pockets.

Setting out plans to share our wealth with those in need will not only be viewed as a good deed, it will also help reduce the amount of money owed to the tax man upon passing.

Currently, individuals who leave a legacy to charity will be exempt from inheritance tax on the legacy itself.

As part of the coalition’s Big Society initiative, from 6 April, individuals who leave at least 10 per cent of their net estate (in excess of the nil rate band of £325,000) to charity will continue to be exempt on the legacy and the remainder of their estate will benefit from a reduced rate of inheritance tax – 36 per cent rather than the usual 40 per cent.

This is good news for individuals who would like to leave something to a favoured charity and it is good news for charities themselves, which are feeling the pinch more than ever in these uncertain times.

In 2010, the legacy market was worth £1.98 billion, four times higher than it was in 1990.

Research that same year found that seven per cent of people die with a gift to charity in their will, representing three per cent of all money left in estates.

For charities, while short-term funding may be the overriding challenge, longer-term, legacies are a necessity. And it is why incentives may hold the key.

So with legacies so vital to charities’ future, I would like to see the government’s move matched by other innovative measures.

Awareness campaigns, more tax benefits for those not affected by inheritance tax and even lifetime benefits to potential donors could all provide a much-needed boost to legacy giving.

As the new tax year beckons, the government’s plan should act as a springboard for new incentives to help sustain charities and encourage more people to think about donating through their will.

• David Dunsire is executive partner of Tods Murray and heads up the charity team.