Proving if an unregistered charity was qualifying

Numbersup

If you give a lump sum whilst alive to a genuine local but unregistered charity , if you died whilst the charity was still operating  the donation  would I believe qualify to be claimed against inheritance tax ?  However  if  by the time you died , the charity had  closed down for whatever reason ,   would  the donation still be exempt?   Would the donor whilst making the donation need to have some sort of proof to leave with his will  to show that at the time of giving , the charity was exempt ?

Marcon

Numbersup said:

If you give a lump sum whilst alive to a genuine local but unregistered charity , if you died whilst the charity was still operating  the donation  would I believe qualify to be claimed against inheritance tax ?  However  if  by the time you died , the charity had  closed down for whatever reason ,   would  the donation still be exempt?   Would the donor whilst making the donation need to have some sort of proof to leave with his will  to show that at the time of giving , the charity was exempt ?

If the donation was made before you died, then the cash would already have 'left' your estate and so whatever you donated wouldn't be included in the overall value of your estate.

It's leaving gifts (legacies) in your will that can impact on IHT. If you leave at least 10% of your net estate to charity, it can reduce the rate of IHT to 36%.

Numbersup

Ah thanks, I didnt express myself very well -- getting mixed up with gifting I think  . I keep a list of  amounts I pay out  (and who to)  that  are gifts so any amount over my allowance for gifts, if non charitable,  can  be added  back into my  estate total when I die (if  less than 7yrs - know theres a scale) , before its assessed for IT . Hopefully  it will make life easier for my executor.

 Im thinking  that amounts  Ive recorded as to qualifying charities without registration ,  will be fine to be seen as  an not needing to be added  back to  the estate , if an executor can check they qualify --   but  Im wondering what will happen if my  executor looks at  the gifted amount I made   to what I recorded as a qualifying charity , a few  years before my death,   but that unregistered charity no longer exists , so executor  has no idea now whether it was a qualifying one  or not  .. Aren't executors required to  check ?(Otherwise anyone could  name any  old organisation as 'an unregistered but qualifiying charity)  

Savvy_Sue

But even if the charity still existed, where would you be able to check that it was qualifying, while unregistered? 

I'm aware that a charity can be unregistered, especially in its early days before its income allows it to even apply for registration, but not sure where these things are recorded. 

Marcon

Numbersup said:

Ah thanks, I didnt express myself very well -- getting mixed up with gifting I think  . I keep a list of  amounts I pay out  (and who to)  that  are gifts so any amount over my allowance for gifts, if non charitable,  can  be added  back into my  estate total when I die (if  less than 7yrs - know theres a scale) , before its assessed for IT . Hopefully  it will make life easier for my executor.

 Im thinking  that amounts  Ive recorded as to qualifying charities without registration ,  will be fine to be seen as  an not needing to be added  back to  the estate , if an executor can check they qualify --   but  Im wondering what will happen if my  executor looks at  the gifted amount I made   to what I recorded as a qualifying charity , a few  years before my death,   but that unregistered charity no longer exists , so executor  has no idea now whether it was a qualifying one  or not  .. Aren't executors required to  check ?(Otherwise anyone could  name any  old organisation as 'an unregistered but qualifiying charity)  

Are the unregistered charities claiming gift aid on your donations? They can if they are registered with HMRC (even if they aren't registered with the Charity Commission), which would be pretty conclusive evidence.

Otherwise I think you are (happily) probably worrying about nothing. Most executors haven't a clue - and aren't left any clues by the dear departed - about the gifts made during the last 7 years of the testator's life. Unregistered charities have income of no more than £5K a year, so by definition you can't be donating many thousands of pounds to them, or you'd be pushing them into registration territory. The fact you have a list of gifts is both impressive and rare. I'd stick to recording the ones which weren't made to charities - and making sure your executor knows where to find the list!

Numbersup

Many thanks. I wasnt aware charities  could only get donations up to  5k  without getting registered  .   Useful to know. I will keep jotting them all down,  but  wont worry about the  'what ifs' , the executor can sort it if it is challenged.  Wouldnt be surprised though if   the Govt gets HMRC to start paying closer attention  to  how much money people leave . 

Savvy-Sue  ,  I just though if a charity still existed , an executor could  just visit , and if it  was clearly providing a service , or goodies or doing whatever  the point of the charity is , for  the community --  then that would go a long way to  showing that  at least superficially  , it qualifies. 

probate_slave

There are a couple of things to add here:

If a charity is unregistered it cannot qualify for IHT relief under s.23 IHTA 1984, and neither can it claim back Gift Aid.

https://www.legislation.gov.uk/ukpga/2010/13/schedule/6

https://www.gov.uk/charities-and-tax/get-recognition

If a charity is registered and qualifying, HMRC ask for gifts to the charity to be declared in IHT403, so worth keeping records. Any subsequent closure wouldn't affect the relief.

Marcon

probate_slave said:

There are a couple of things to add here:

If a charity is unregistered it cannot qualify for IHT relief under s.23 IHTA 1984, and neither can it claim back Gift Aid.

https://www.gov.uk/charities-and-tax/get-recognition

See https://www.gov.uk/charity-recognition-hmrc

probate_slave

Apologies, as Marcon already mentioned, a charity can claim Gift Aid if registered with HMRC while unregistered with the Charity Commission.

But I believe my point about not qualifying for IHT relief stands, under the Finance Act 2010 Schedule 6 Part 1.

boingy

I think the most likely scenario for most executors is that they won't even know about most gifts and donations. For every person that keeps a full set of records there are probably a dozen others who do not. And we're now in the age of paperless everything so there are not even paper bank statements to give you a few clues. I doubt very much that there are any executors visiting charities to see if they qualify!