Charity Partnership Welcomes Call for Digitised Wills & Simplified Inheritance Tax

A charity partnership has welcomed a new report into tax simplification and its call to make the management of estates and legacy donations easier.

The Office of Tax Simplification’s (OTS) first report was issued at the end of last month as part of a national review of inheritance tax. At present, charitable gifts are exempt from IHT and people who donate more than 10 percent of their estate to charity benefit from a discounted rate of 36 percent (as opposed to 40 percent) across the remaining value of their estate.

The report focuses on the administration of the tax, rather than how inheritance tax will be structured in the future. Describing inheritance tax as both ‘unpopular’ and ‘complicated’, the OTS recommends the UK Government should implement a fully integrated digital system for inheritance tax and probate applications, to simplify the administration of estates.

Regulation of will-writing market

The OTS also observes that ‘regulating the will-writing market would help improve the administration process’. A recent Commons briefing paper outlined the arguments for and against regulating this market.

Gifts left in wills contribute the largest single source of voluntary income to the charity sector, generating about £3 billion for good causes every year.

Rob Cope, director of Remember A Charity (a partnership that represents 200 charities), said: “The current fiscal incentives have proved to be a powerful driver encouraging people to consider the option of donating when writing their will. If current giving levels continue, over the next five years over 10,000 estates will likely benefit from this reduced rate of tax, generating millions in legacy income.

Legacy giving ‘more commonplace’

“Legacy giving is becoming more commonplace and, with an increase in the number of estates liable to inheritance tax, it is critical that any changes protect the market and continue to enable and inspire the public to support the good causes they care about.”

Cope added a more straightforward inheritance tax system would make it easier for people’s estates to be handled quickly and efficiently, and for the relevant exemptions to be applied. Steps that reduced the administrative burden for everyone, including charities receiving the donations were to be welcomed.

Adding to the current debate about the lack of regulation in the will-writing marketplace, Cope said that the growing disparity in the way that wills were written had seen an increase in disputes over charitable estates. With this in mind, he argued the case for clear and consistent processes had never been greater.

“The public needs to have a choice about who and what they support from their will and the confidence to ensure that their final wishes will indeed be met,” he commented. “We continue to appeal to government representatives to ensure that any changes will continue to encourage and promote charitable legacies.”

Remember A Charity said recently that, together with the Institute of Fundraising and supported by ACEVO, NCVO, ILM and STEP, it had written to the government calling for a discount or exemption on probate fees for charitable wills.

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