Gifts and Legacies
We are enormously grateful to the Liverymen and Freemen who, over centuries, have written their names in our history by remembering the Company or one of its charities in their wills or letters of wishes. The Charity was very surprised and honoured to be named recently as a residuary legatee in the will of a Freeman. Her legacy has allowed the Charity to increase its programme of giving, with a particular focus on helping those in optical education.
Inheritance tax
Most unused pension funds and pension death benefits will be included in a person’s estate for Inheritance Tax (IHT) purposes starting 6 April 2027. This will particularly impact a surviving spouse or civil partner. IHT liability is based on the value of an estate that exceeds the ‘nil-rate band’ which is frozen at its current rate of £325,000 (£500,000 with the residential allowance) until at least 2030. If the pension owner dies after the age of 75, the inherited pot will face a 40% IHT rate if the estate exceeds thresholds, and the remaining 60% balance will still be subject to the beneficiary’s marginal income tax rate upon withdrawal. This can result in an effective total tax rate of up to 67%. The minimum even for a basic rate taxpayer is 52%.
If your estate is expected to exceed these amounts on death, you might want to examine ways to lower the value of your estate.
Gifts made during your lifetime are generally free of IHT if you survive for seven years from the date the gift is made. This is known as the ‘seven-year rule’ and the gifts as ‘potentially exempt transfers’. Tax is paid at 40% on death within three years of making a gift and then on a sliding scale, known as ‘taper relief’, with no tax to pay after year seven.
If you opt to give money to a registered charity, though, your gift is IHT-free from the outset. Not only that, but if you make charitable donations of 10% or more of the net value of your estate, you could see your overall rate of IHT drop from 40% to just 36%.
If members of the Company are planning for the future and wish a note to be made of their intentions, or if you would like to support the Charity and have a discussion about how you could help, please contact the office on 020 7236 2932 (+44 207 236 2932) or email charity@spectaclemakers.com to arrange a time for a confidential conversation. Thank you.
Limited company donations
The Charity also welcomes donations from limited companies. This can be tax efficient as a company pays less Corporation Tax when it gives money to a registered charity. The value of the donation is deducted from the total business profit before tax. If your company is interested in supporting in this way, please contact the office for more information.
Find out how to leave a gift of lasting value in our Guide to Gifts and Legacies.
