Charitable tax incentives fail to convince

An attempt by the government to encourage people to leave money to charities in their wills has “fundamental defects” and should be replaced, the Chartered Institute of Taxation (CIOT) has said. Nick Huber reports.

The CIOT was commenting on a government consultation paper, A new incentive for charitable legacies, published in June, that propose a lower rate of inheritance tax (IHT) when someone leaves 10% of their estate to charity.

The tax cut is one of a package of measures aimed at encouraging charitable donations. announced in the March Budget.

The CIOT said that the government’s proposals are “unnecessarily complex”, and may act as a “perverse disincentive” to lifetime charitable giving. Another problem, according to the CIOT, is that the consultation ignores the burden of additional valuation and compliance costs.

The CIOT has suggested that a non-repayable IHT credit to all charitable gifts on death would be a simpler, more workable alternative to the Government’s proposal.

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