Leaving a Legacy in your Will

Most of us want the beneficiaries under our Will to receive all our estate when we die.  Most of us would prefer not to pay any Inheritance Tax at all. By making a Codicil to your Will, including a legacy for our Parish but leaving the rest of your Will unaltered, you could free your beneficiaries of a tax burden and of course help your Parish.

Did you know that if you leave a legacy to this Parish via a Codicil to your Will, the legacy will be completely exempt from Inheritance Tax, however small or large the legacy is? You can even leave the ‘top slice’ of your estate to the Parish thereby benefitting all the other beneficiaries under your Will. How does that work?

Say you leave an estate of £350,000, consisting of a flat worth £300,000 and £50,000 in cash. Every person dying domiciled in England and Wales has a single Nil Rate Band (NRB) of £325,000 which they can leave without paying any Inheritance Tax.[i] (see overleaf)

Without a legacy to this parish

Your estate             £350,000

Less NRB                  £325,000-

Chargeable estate    £25,000 x 40% IHT = Inheritance Tax payable of £10,000

With a ‘top slice’ legacy to this parish

Your estate             £350,000

Less NRB                  £325,000-

Less Parish legacy    £ 25,000- (Charitable exemption claimed, your Parish is a registered charity)

Chargeable estate            NIL     No Inheritance Tax payable.

Smaller legacies are also very welcome, as every little helps. We encourage you to state in your Codicil what you wish the legacy to be spent on. Your Executors and the PCC will follow your wishes.

Photo by Kat Yukawa on Unsplash

[i] For ease of illustration, this example assumes that the additional Main Residence Exemption is not applicable in this case and that the Testator is a single or divorced person with no additional IHT exemptions to claim. It also assumes that no lifetime gifts have been made which exceed allowed sums annually and that there are no trusts or foreign property or any other assets which are added on to the estate after death for IHT purposes.

Serving the Villages North of Farnham: Badshot Lea, Hale, Heath End & Weybourne