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HMRC internal manual

Inheritance Tax Manual

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.