Inheritance Tax Act 1984 Schedule 1A paragraph 2

The relief

Schedule 1A paragraph 2 sets out the conditions under which a reduced inheritance tax rate of 36% applies to parts of an estate where sufficient charitable donations have been made.

• Where the charitable giving condition is met, the qualifying part of the taxable estate is charged at the reduced rate of 36% instead of the normal 40% rate.
• The charitable giving condition requires that, for at least one component of the estate, the amount donated to charity is at least 10% of the baseline amount for that component.
• The estate is divided into separate components, and each component is assessed individually to determine whether it meets the 10% charitable giving threshold.
• Any part of the taxable estate that does not qualify for the reduced rate continues to be taxed at the rate that would otherwise have applied to the whole taxable amount.