Any gifts you make to a ‘qualifying’ charity – during your lifetime or in your will – will be exempt from Inheritance Tax.

The latter remains the case, however you may be aware that if you leave at least 10% of your net estate to a qualifying charity in your Will, the reduced inheritance tax rate of 36% will apply on death.

A qualifying charity is an organisation that’s recognised as a charity for tax purposes by HM Revenue & Customs (HMRC). For Inheritance Tax purposes a Community Amateur Sports Club (CASC) is also treated as a qualifying charity.

Unfortunately, obtaining the relief is not as simple as it seems.  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, however, it is possible that one part of your estate may pay Inheritance Tax at 36 per cent and another pay tax at the full rate of 40 per cent and this is due to other factors which are additionally brought into your estate for inheritance tax calculation purposes including joint assets, assets held in trust.

The effect of the relief where it applies is that the remainder of the deceased’s net free estate going to non–charitable beneficiaries bears IHT at the lower rate of 36%, instead of at the normal IHT rate of 40%.

What remains a problem in Will planning is that, in practice, the deceased will not generally know in advance the value of their net death estate. This will most certainly lead to situations in which a gift left by will, contrary to the testator’s intentions, turns out to be insufficient to satisfy the 10% test.

HMRC offer a reduced rate online calculator which can help you determine how much of your net estate would need to be gifted to charity in order to satisfy the 10% test. (www.gov.uk/inheritance-tax-reduced-rate-calculator)

In conclusion, remember that not all parts of your estate will qualify for the reduced rate of Inheritance Tax, and whether donating 10% of your assets will leave your beneficiaries better off will depend on the make-up and total value of your estate.