What is the reduced inheritance tax rate applied when 10% or more of an estate is left to charity?

When an estate leaves 10% or more to charity, it qualifies for a reduced rate of inheritance tax. This incentivizes charitable giving and allows estates to lessen the tax burden when they generously contribute to qualifying charities.

In the context of the current regulations surrounding inheritance tax, leaving 10% or more of the taxable estate to charity reduces the effective inheritance tax rate applied to the remainder of the estate. The specific reduced rate in this case is 36%. This policy is designed to encourage individuals to support charitable causes, thus benefiting society as a whole, while simultaneously providing a financial advantage for estates.

Understanding the rationale behind this tax incentive is crucial for estate planning, as it allows individuals to maximize the impact of their estate while managing their tax liabilities effectively.