UK/US Charitable Donations And Donor Advised Funds

Both UK and US taxpayers have long been made aware of the tax benefits of donating money to charity. Although there are benefits to lifetime giving, such as Gift Aid in the UK or the US income tax deduction, this article will focus on charitable legacies made on an individual's death and their UK inheritance tax and US estate tax reliefs.

Most UK taxpayers are aware (often via advertising) that a legacy left to a UK charity on death will not be included in the value of the deceased's estate for UK inheritance tax purposes. If a taxpayer leaves 10% or more of their net estate to a UK registered charity, the rate of inheritance tax on the rest of the estate reduces from 40% to 36%.