IHT bills cut for those giving to charity

Inheritance tax (IHT) bills for those leaving 10% or more to charity will be slashed by the same amount, in measures announced in today's Budget.

From next April, the IHT rate will be cut to 36% for those leaving part of their estate to charity, as part of the government's plan to galvanise a charitable Britain.

Get all the news, views and reaction to the chancellor's speech in our spotlight on the 2011 Budget.

George Osborne commented in today's Budget that this "major change" is to make "giving 10% of your legacy to charity the new norm in our country".

This tax change will mean charities benefit from an extra £300 million each year.

In addition, from next April IHT will be indexed against the consumer prices index measure of inflation, although the current £325,000 nil-rate IHT band is frozen until April 2015.

Jonathan Gain, chief executive of Stellar Asset Management, said that the change is a "feel-good measure". He added: "There's potential for it to be very attractive, and I think people will give it greater consideration. It will change everybody's outlook."

However, he did mention that this year's Budget is "fairly quiet" from an IHT point of view.

Cathy Adams is editorial assistant on our sister publication, Money Observer.