Supporting Us FAQs
Q:I am a UK taxpayer. Can I reduce my Inheritance Tax bill by leaving a Legacy to LionAid?
The simple answer is yes!
Any gifts you make to LionAid (recognised as a charity for tax purposes by HMRC) during your lifetime or in your will may be exempt from Inheritance Tax but if your estate is worth over £325,000 when you pass away, Inheritance Tax may be due. Any legacy that you leave to a recognised charity will reduce the value of your estate and may serve to bring you below the Inheritance Tax limit.
In addition, from 6 April 2012, if you leave 10 per cent of your estate to a charity such as LionAid, any tax still due may be paid at a reduced rate of 36 per cent instead of 40 per cent.
The net value of your estate is the sum of all the assets after deducting any debts, liabilities, reliefs, exemptions and the nil-rate band.
This is a wonderful way to reduce your tax bill and instead, directly benefit those causes dear to your heart. If you love lions, here is a way to leave a lasting Legacy to help future generations have the opportunity to share this planet with one of the world’s most iconic species.
LionAid is working tirelessly to save the world’s remaining fragile lion populations Click here to read about the problems facing lions in Africa and LionAid’s 10 point conservation programme to save the lion from extinction.
Here is an example of how a Legacy can reduce your tax bill:
Leo died on 17 June 2013 leaving an estate valued at £500,000 after the deduction of liabilities. He leaves £50,000 to LionAid in his will.
Step 1 - deduct the £50,000 LionAid donation from £500,000 (the net estate). This leaves a figure of £450,000.
Step 2 - deduct £325,000 (Inheritance Tax nil rate band) from £450,000. This leaves a figure of £125,000.
Step 3 - add £50,000 (the value of the LionAid donation) back to £125,000. This gives a figure of £175,000 - the ‘baseline amount’.
10 per cent of the estate of £175,000 is £17,500. This estate qualifies for the reduced rate of Inheritance Tax because the charitable donation of £50,000 is more than 10 per cent of the ‘baseline amount’.
The Inheritance Tax payable will therefore be only £45,000 compared to £70,000 if no Legacy had been provided and Inheritance Tax was due at the full rate.
Ist Gain: £50,000 Legacy is exempt from Inheritance Tax. A saving of £20,000 at the 40% rate
2nd Gain: The remaining estate attracts tax at 36% instead of 40% as the donation is more than 10% of the baseline amount. A further saving of £5,000.
Total tax saving: £25,000.
So, on a Legacy of £50,000, £25,000 will come directly from the tax saving on the net estate!
You can of course choose where your valuable assets can do the most good for future generations, but by donating to a charity such as LionAid you are both contributing to valuable conservation work and reducing your inheritance tax burden.
Read more on the HMRC website here
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