# Inheritance Tax at 36%: a £60,000 charity gift out of a £600,000 estate costs the family £27,400, not £60,000

> Leave 10% of the net estate to charity and the Inheritance Tax rate drops from 40% to 36%. On a £600,000 estate a £60,000 gift costs the family £27,400.

- Page to cite: https://aeolookup.com/solicitors/inheritance-tax-36-percent-reduced-rate-10-percent-to-charity-600000-estate-worked/
- Publisher: AEO Lookup (https://aeolookup.com/)
- Section: Solicitors, Probate and private client
- Published 11 October 2026
- Key fact: A £600,000 net estate, all to children, with the £325,000 threshold. Without a gift the tax is 40% of £275,000, which is £110,000, and the children receive £490,000. With £60,000 to charity the taxable part is £215,000, at 36% that is £77,400, and the children receive £462,600. The family is £27,400 worse off for a gift of £60,000, so the gift costs 45.7p in the pound.
- Sources: GOV.UK, "Inheritance Tax" overview (standard rate 40% above the £325,000 threshold; estates can pay a reduced rate of 36% on some assets where 10% or more of the net value is left to charity in the will; net value is the estate less debts). Read 11 October 2026.

A client with an estate of about £600,000, all going to two children, says they would like to leave something to the hospice that cared for their husband. A solicitor can say "it's tax-efficient" and leave it there. Clients usually want the number. This guide works one estate, and says what I did not read.

## The rule on GOV.UK

The overview page gives the standard Inheritance Tax rate as **40%**, charged on the part of the estate above the **£325,000** threshold. It then says the estate can pay tax at a reduced rate of **36%** on some assets "if you leave 10% or more of the net value" to charity in your will. Net value is the estate's total value less debts. Gifts to charity are themselves exempt.

## One estate, with and without a gift

£600,000 net, no spouse exemption and no residence nil-rate band, to keep the test clean.

| | No charity gift | £60,000 to charity |
|---|---|---|
| Net estate | £600,000 | £600,000 |
| To charity (exempt) | £0 | £60,000 |
| Less threshold | £325,000 | £325,000 |
| Taxable | £275,000 | £215,000 |
| Rate | 40% | 36% |
| Tax | £110,000 | £77,400 |
| Children receive | £490,000 | £462,600 |

The charity gets £60,000 and the children get £27,400 less. Put plainly, every pound given costs the family about 45.7p. The tax saving of £32,600 is made up of £24,000 (40% of the £60,000 that left the taxable estate) and £8,600 (the rate falling from 40% to 36% on £215,000).

## The part I did not read

GOV.UK's overview uses the words "net value". HMRC's own test for the reduced rate works on a "baseline amount", which I did not read on this page, and it gives a smaller figure than the net estate. So the minimum gift that qualifies may be lower than 10% of the estate. A gift of exactly 10% of the net value, as above, is the safe side of the line for this example, but read HMRC's full guidance before you quote a smaller one.

## Why the number is worth giving

Clients often assume a charity gift is either free or a full loss to the family. The table shows it is neither: the state shares in the cost through the lower rate and the exemption, so the family bears a little under half. Some clients will find that persuasive and others will not, and either way they decide with the figure in front of them rather than with a phrase.

## What to ask the client

- **Is the gift in the will, or planned as a lifetime gift?** The page speaks of a will.
- **Does a spouse or civil partner take everything first?** Then the threshold arithmetic is different.
- **Does the home go to the children?** GOV.UK says the threshold can rise to £500,000 in that case, which changes the table.
- **Will the charity name be right?** A will naming a charity that has merged needs a check.

Where the client has no will at all, see what [intestacy does to a £322,000 estate](https://aeolookup.com/solicitors/intestacy-no-will-spouse-322000-statutory-legacy-half-residue-children-worked/), and keep the family informed with a [regular client update](https://aeolookup.com/solicitors/conveyancing-client-update-email-template/) in the same tone.

Overlyft ![](https://aeolookup.com/img/d/ours-badge.png) builds AI staff who join your private-client team and prepare the one-page "what the gift costs the family" sum from the client's own estate figures for a fee-earner to check before it goes out.

This is general information, not legal or tax advice. Check GOV.UK and HMRC's guidance before you advise.

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General information for UK small firms, not legal, tax or financial advice.