hiriskpaul wrote:Comparison with gift aid can get very complicated.
Yes, while the two, Gift Aid and IHT re charitable donations, are straightforward in themselves, well done for elucidating on their interaction in respect of reducing (or not) the size of the estate.
A couple of tangential things to add. Firstly, not sure if you intended it but your OP seems to imply that the purpose of leaving 10% to charity would be to get the reduced rate of IHT. Well, unless I'm missing something,
if that were the
sole reason for doing so then, as the 10% is of the whole net estate whereas the IHT (reduced a tenth from 40% to 36%) is applied on the estate over £325K (simple case, no dependents/descendants). So the tax saving will always be less than the cost of the 10% donation.
The other thing, as Dod mentioned re Gift Aid, is that you can only Gift Aid up to the grossed up amount of tax you've paid, and if you think of that in comparison to the 10%, most people will get there pretty quickly after exceeding the £325K allowance. Even with a modest estate of £500K, 10% of that is £50K and were you wanting to Gift Aid the equivalent instead (£40K + £10k GIft Aid) that'd take you (a bit) into the higher rate tax band to pay the £10K tax. While that might not be an issue for many people working, amongst retired folks asset-rich-income-(relatively)poor is much more common and, esp. with house price inflation, it's likely to take most pensioners many years to make a 10% of assets equivalent set of Gift Aidable donations