Budget Summary – November 2025

We are delighted that Ian Bond will be giving his reflections on the budget on Friday 5th December. In the meantime, we have produced a short summary of the changes about IHT that you can share with any interested stakeholders:

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Gifts directly to UK charities remain fully exempt from IHT

For mainstream UK charities nothing changes about how legacies are treated:

· A gift left directly to a UK-registered charity will still qualify for 100% IHT exemption.

· There is no additional admin or compliance burden for these charities.

Possible impact: None – Ordinary charitable legacies to UK charities continue exactly as they do now.

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There are changes to the rules that target charitable trusts that are not UK charities

The exemption will no longer apply if a donor leaves money to a trust that behaves like a charity but is not registered as a UK charity or CASC.

Examples:

· Private charitable foundations set up offshore

· Charitable trusts created by individuals that do not meet UK charity law

· Trusts that distribute funds to charity but are not themselves regulated as one

How this might affect charities:

· Some donors currently leave legacies to a personal charitable trust with the intention that the trust then donates to UK charities.

· Under the new rules, these gifts may no longer be IHT-exempt unless the trust qualifies as a UK charity.

This may nudge donors away from gifting to private charitable vehicles and towards direct gifts to established UK charities.

Possible Impact: A small number of donors may redirect planned gifts away from their own charitable trusts and towards recognised UK charities to preserve the IHT exemption.

HMRC estimates fewer than 50 people will need to revise wills granting to non-qualifying trusts. The number benefiting major charities will therefore be small but possibly positive.

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Simplification for advisers may increase direct charitable legacies

Because the rules now align across different taxes (IHT, income tax, gift aid rules, etc.), advisers may increasingly recommend the simplest route:

· Make the legacy directly to a major UK charity, or

· Ensure the vehicle is a UK-registered charity.

This reduces uncertainty and reduces the risk of the legacy failing the exemption test.

Possible Impact: Estate planners may encourage more direct legacy giving to UK charities to avoid complications.

There is no negative impact expected for major UK charities

The measure explicitly states:

· No expected adverse impact on charities and CASCs

· Exempt gifts can be made “in the usual way”

· Charitable trusts created by will can still register as UK charities if they meet the rules

So mainstream UK charities should not face:

· Loss of legacy income

· Additional reporting requirements

· Compliance burdens

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Overall Expected Impact on UK Charities

Neutral to slightly positive.

Most legacy gifts:

· Already go directly to UK charities, not through offshore or non-qualifying trusts

· Will continue to be fully IHT-exempt

The only donors needing to change plans are a very small group giving through non-UK charitable structures.

As a result, the changes could:

· Increase the likelihood that advisers recommend direct charitable legacies, and;

· Slightly increase the number of legacies received directly by major UK charities.

The scale is expected to be small in absolute numbers.