Gifts to charities or registered clubs: introduction
In general, transfers to qualifying charities or registered clubs, established in the UK, European Union (EU) and certain other specified countries are wholly exempt. More specifically, IHTA84/S23 exempts a transfer of value (IHTM04024) to the extent that the value transferred (IHTM04028) is attributable to property which is given to charities or registered clubs (IHTA84/S23 (1)).
Property is given to:
- charities if it becomes the property of charities or is held on trust for charitable purposes only (IHTA84/S23 (6) (a)).
- registered clubs if it becomes the property of registered clubs or is held in trust for the purposes of registered clubs only (IHTA84/S23 (6) (b)).
The exemption has no value limit. It applies to both lifetime and death transfers, including transfers of settled property in which the deceased/transferor had a qualifying interest in possession (IHTM16061).
This particular section of guidance looks at:
- the requirements for charity exemption and the meaning of ‘charity’ (IHTM11112) as well as
- establishing charitable status(IHTM11123)
- Community Amateur Sports Clubs (CASCs) and the meaning of ‘registered clubs’ (IHTM11140)
Where the deceased died on or after 6 April 2012 and left at least 10% of their net estate to beneficiaries that qualify for charity exemption under IHTA84/S23(1), the rate of tax is reduced to 36%. The reduced rate only applies to transfers on death. Guidance on the application of the reduced rate is at IHTM45001 onwards.