Commentary

I4.167 Reduced rate where 10% left to charity

IHT, trusts and estates

I4.167 Reduced rate where 10% left to charity

I4.167 Reduced rate where 10% left to charity

For deaths on or after 6 April 2012, there is a reduction in the rate of IHT from 40% to 36% where 10% or more of a deceased person's net estate is left to charity (such that the gift qualifies under IHTA 1984, s 23, see I4.215)1.

The relief only applies where the net value of the estate (ie after deducting all liabilities, reliefs and exemptions but excluding the charitable legacy itself) exceeds the nil rate band2.

The reduced rate applies automatically if the qualifying conditions are met, unless an election is made to opt out3.

The election must be made by all appropriate persons with respect to the qualifying components4 — see below.

It is important to note though that the reduced rate does not apply on the occasion of conditionally exempt property or settled property (I7.531) subsequently becoming chargeable5. Nor does it apply on the occasion of timber subsequently

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