The organisation Remember A Charity is calling for a review of inheritance tax to look at legacy income and give charities a voice in any reform, according to a UK fundraising article.

Legacy income is thought to bring £2.8 billion every year for the sector. Money or assets left to charity is exempt from inheritance tax (40 percent) and a lower rate of tax (36 percent) applies to estates when 10 percent or more is donated to the sector.

The think tank Resolution Foundation published a report which suggested scrapping the UK’s inheritance tax and replacing it with a lifetime receipts tax (LRT). Passing on: options for reforming inheritance taxation says the current system raises relatively little and is unpopular. The paper says LRT would encourage people to spread their wealth wider and raise revenue to help fix Britain’s “intergenerational contract”.

The report follows the Government’s launch of the Office of Tax Simplification’s consultation into the inheritance tax, which closes on 8 June 2018. Inheritance tax raised £4.8 billion in 2016/17 and for 2017/18, it is forecast to bring in £5.3 billion. The tax was paid on 29,000 deaths in 2016.17, about 4.9 percent of all deaths.

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Remember A Charity says it welcomes the review, but it wanted to highlight the need for charities to have their say. The public and policy-makers need to understand the impact leaving gifts to charities in wills have and how inheritance tax relief encourages people to leave legacies.

Rob Cope, the director of Remember A Charity, said: “It is critical that any review of the current inheritance tax framework fully considers the importance of gifts in wills and impact on beneficiaries. The benefit of the current rate relief goes well beyond the immediate financial impact, creating an environment where conversations about charitable giving are becoming more commonplace.

“Charities and their beneficiaries are increasingly reliant on legacy income, which funds vital services that make a real difference to our lives, ranging from finding a cure for cancer to providing emergency services and more… [W]e would be deeply concerned that the removal of these incentives could threaten one of the sector’s most significant income streams.”

Last year, Remember A Charity proposed introducing a VAT exemption on the cost of writing any will that includes a gift to charity.

Danny Curran, Finders International’s founder and managing director, said: “Many charities rely on the income they receive from wills, and there are a lot of people who want to be able to leave sums of money to good causes in their wills. Lowering tax rates for donations is one reliable way to do so. A review needs to take this into account.”