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Chancellor cuts tax for estates that support charities

Inheritance tax on estates that support charities is to be cut by 10%.

The Chancellor, George Osborne, made the announcement during his budget speech.

He said that if at least 10% of the estate is left to charity, then inheritance tax (IHT) will be cut by 10%. This would reduce IHT from the standard 40% to 36% for qualifying estates.

Mr Osborne insisted that the aim was to help charities, not cut taxes for the wealthy. He said: "If you leave 10% or more of your estate to charity, then the government will take 10% off your IHT rate. Let's be clear: no beneficiaries will be better off, just the charities to the tune of £300m. I want to make giving 10% of your legacy to charity the new norm in our country."

The new measure will come into effect in April 2012.

The inheritance tax threshold is currently £325,000. Last year, IHT was paid on more than 15,000 estates in the UK.

It’s likely that the announcement will prompt many people to review their will and their inheritance planning.

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