New Budget tax break to encourage charity donations unlikely to greatly change number of bequests

March 29, 2011 - PRLog -- THE NEW tax relief for charities is unlikely to create a sea change in donor habits according to specialist wills, trusts and probate lawyer Paul Davies.

Davies, a partner at specialist estate planning legal practice Lane-Smith & Shindler believes that George Osbourne’s new proposal might even have a detrimental affect on charities.

The new tax break offers those that give 10% or more of their estates to charity a tax break.  After the £325,000 tax threshold is reached, the estate will be taxed at 36% rather than 40%.

The Chancellor believes the new tax relief proposal could generate as much as £300 million for charitable causes within three years of it being put into effect in April 2012.

Davies believes this could be optimistic: “Very few people leave as much as 10% of their estates to charity.  Those who do usually do not have close family or friends.  Although the relief appears to be relatively generous, I do not see it persuading many to act differently once it comes into effect.”

Davies believes, looking at it from the other side it could even have a detrimental affect: “Some might consider putting off charitable donations until their death to aid their beneficiaries with the tax break.”

Davies concludes: “The Chancellor’s tax relief for giving to charity is certainly a surprise announcement.  There will be questions as to how much impact it will have, but it is an interesting initiative.

I believe those wishing to support charitable institutions through leaving legacies will continue to do so.  There are many wealthy and not so wealthy individuals who wish to contribute to charitable causes, regardless of any additional tax relief.”

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