Julian Hay, Head of Private Client, William Sturges

Changes introduced by the Finance Act 2026 affect the Inheritance Tax (IHT) treatment of certain charitable gifts, including provisions in Wills which give executors or trustees discretion to select the charities that will ultimately benefit.

Individuals with this type of provision in their Will should consider whether the drafting still achieves the intended tax treatment.

What has changed?

Section 23 of the Inheritance Tax Act 1984 provides an exemption from IHT for qualifying gifts to charity.

Previously, for the purposes of the exemption, property was treated as given to charities if it became the property of charities or was held on trust for charitable purposes only.

Section 78 of the Finance Act 2026 changed this. For transfers arising on death, the amendment applies where the individual dies on or after 6th April 2026.

HMRC’s current guidance confirms that, from that date, the exemption no longer applies simply because property is held on trust for charitable purposes only.

Why is this important for Wills?

A common form of Will drafting has been to leave property to executors or trustees to hold for such charities, and in such proportions, as they decide.

This gives the individual flexibility. Rather than naming each charity in the Will, they can indicate their preferred beneficiaries in a separate letter of wishes, which can be updated without formally amending the Will.

Under the previous wording of section 23, a Will trust for charitable purposes could qualify for the IHT exemption before the trustees had selected the ultimate charities.

Following the Finance Act 2026 amendment, that can no longer be assumed. Where property is held on a charitable trust rather than being given to a qualifying charity, the exemption may not be available.

The IHT exemption for gifts in a Will to a qualifying UK registered charity remains in place.

Should existing Wills be reviewed?

It is recommended to review a Will periodically or following a change in personal or family circumstances. Following these recent changes Wills should be reviewed where they:

• give executors or trustees discretion to select charitable beneficiaries;
• establish a trust for charitable purposes rather than making gifts directly to identified charities; or

It may not be necessary to amend the Will, but the precise wording should be checked against the new legislation.

If your Will contains charitable provisions and you would like advice on whether they are affected by these changes, please contact Julian Hay Head of Private Client, William Sturges Julian.Hay@williamsturges.co.uk