The example in the calculator
A single parent leaves a £450,000 home to their children, £250,000 of other assets and a £200,000 pension (death after 6 April 2027). Without any charity gift the tax is £160,000.
- Estate: £900,000.
- Baseline (estate minus the £325,000 nil-rate band — the residence band is not deducted here): £575,000.
- 10% of the baseline: £57,500. That is the smallest charity gift that unlocks the lower rate.
- Taxable: £900,000 − £57,500 − £325,000 − £175,000 = £342,500.
- Tax at 36%: £123,300.
How much the gift really costs the family
| Left to charity | Rate | Inheritance tax | Family receives |
|---|---|---|---|
| £0 | 40% | £160,000 | £740,000 |
| £50,000 | 40% | £140,000 | £710,000 |
| £57,500 | 36% | £123,300 | £719,200 |
| £100,000 | 36% | £108,000 | £692,000 |
A £57,500 gift reduces what the family receives by only £20,800. A £50,000 gift falls just short of 10%, so the rate stays at 40%.
Getting it right in the will
- Use a formula. Estates change in value. Many solicitors write the gift as “the amount needed to qualify for the reduced rate” rather than a fixed sum.
- Registered charities only. The gift must go to a UK charity (or a qualifying one) or a community amateur sports club.
- It can be added later. Beneficiaries can sometimes redirect part of what they inherit to charity with a deed of variation within two years of the death.
A small simplification
For an estate with several parts (for example jointly owned property or a trust) HMRC tests the 10% separately for each “component”. The calculator treats the whole estate as one component, which matches most simple cases. Your solicitor or HMRC’s own reduced-rate calculator can confirm the exact figure.
Try different amounts in the “Left to charity” box above — the calculator tells you the exact 10% target for your estate.
Is it worth it for you?
That depends on what you would like to do anyway. If you already plan to leave something to a cause you care about, the reduced rate means your family gives up much less than the gift itself. If you were not planning any charity gift, it rarely makes sense to give purely for the tax saving: in this example the family still ends up £20,800 worse off than with no gift. The calculator lets you test both and decide what feels right.
Lifetime gifts to charity
Gifts to charity while you are alive are also free of inheritance tax, and with Gift Aid the charity can claim extra on top. They do not count towards the 10% test, which only looks at gifts made on death.
FAQ
How much do I need to leave to charity to get the 36% rate?
At least 10% of the baseline: the estate after the nil-rate band. For a £900,000 estate that is 10% of £575,000 = £57,500.
How much tax does that save?
In this example the bill falls from £160,000 to £123,300, a saving of £36,700. The family receives £719,200 instead of £740,000.
Does a £50,000 charity gift help?
It is exempt, so the tax falls to £140,000, but it is below 10% of the baseline so the 36% rate does not apply.
Sources: GOV.UK policy paper “Inheritance Tax thresholds” (26 Nov 2025) — gov.uk/government/publications/inheritance-tax-thresholds; GOV.UK “Inheritance Tax on pensions: liability, reporting and payment”; GOV.UK press release “Inheritance tax reliefs threshold to rise to £2.5m” (Dec 2025); Inheritance Tax Act 1984 Sch 1A (36% rate). Autumn Budget 28 Oct 2026: no change to the thresholds (HCR Law overview, 30 Oct 2026). Checked 5 November 2026.