The reduced 36% charity rate

Last reviewed 18 August 2026

A quirk of the tax rewards generosity: give enough to charity, and the Crown takes less of what remains — sometimes enough to cost the estate almost nothing.

How it works

Gifts to UK-registered charities are exempt from inheritance tax in full. Beyond that, if you leave at least 10% of your net estate to charity in your will, the rate charged on the rest of the taxable estate falls from 40% to 36%. The 10% is measured against the net value — the estate after the nil-rate band and other exemptions.

Why it can cost little

Because the 4-point rate cut applies to the whole taxable remainder, the tax saved can offset much of the charitable gift itself. On the right estate, increasing a bequest to reach the 10% threshold leaves beneficiaries barely worse off — and a charity considerably better. The arithmetic rewards checking.

Sources. GOV.UK, Inheritance Tax: leaving 10% of your estate to charity (reduced 36% rate; 10% net-estate test).