As economic pressures continue to shape financial decisions across generations, many clients are revisiting how and when they pass on wealth. Whether driven by a desire to support loved ones, reduce inheritance tax (IHT) exposure, or leave a philanthropic legacy, gifting remains one of the most powerful tools in estate planning.
Increasingly, these conversations go beyond tax efficiency. They’re about values, timing, and impact. For clients who want their generosity to make a tangible difference close to home, Sussex Community Foundation provides a trusted way to support small, local charities through lifetime and legacy giving.
Gifting can take place during a person’s lifetime or through their Will. Both approaches offer opportunities to reduce IHT while supporting family members or charitable causes.
Legacy gifts, whether made during lifetime or via a Will, are particularly effective. Gifts to registered charities are exempt from IHT, and if 10% or more of an estate is left to charity, the IHT rate on the remainder of the estate is reduced from 40% to 36%.
Smaller, local charities often rely heavily on legacy income to fund vital grassroots work in areas such as education, wellbeing, and poverty relief. Through the Foundation, donors can ensure these gifts create a lasting legacy that benefits communities for generations.
The current IHT nil-rate band remains frozen at £325,000, and with the residence nil-rate band also capped at £175,000, more estates are falling into taxable territory. For those with surplus wealth, gifting offers a proactive way to reduce future liabilities while supporting the next generation – or causes close to their heart.
One increasingly popular route is gifting into a trust. Trusts created for charitable purposes are not subject to an IHT charge. For non-charitable trusts, a gift of up to £325,000 into a discretionary trust is treated as a Chargeable Lifetime Transfer (CLT) and falls within the nil-rate band, meaning no immediate IHT is payable. This threshold refreshes every seven years, allowing for strategic planning over time.
Trusts offer control, protection, and flexibility, which can be particularly useful when beneficiaries are young or vulnerable. However, they do come with complexity: periodic charges, exit charges, compliance reporting requirements and other tax implications. Professional advice is essential to ensure the trust structure aligns with both tax and family objectives.
In addition to charitable giving, several lifetime exemptions are often overlooked:
These exemptions can be combined with trust planning to create a robust and tax-efficient gifting strategy. Keeping clear records of all gifts (including recipient, value, and date) is essential.
For clients who want their giving to stay local and make a real difference, Sussex Community Foundation offers a simple, effective way to support Sussex charities. Whether through a Donor Advised Fund, lifetime gifts, or legacy giving, the Foundation ensures donations reach the grassroots organisations that need them most.
As advisors, we can help you explore these options alongside your tax and estate planning goals. Whether it’s a first-time gift into a trust, a conversation about legacy giving, or a review of existing plans, we can guide you through the process.
To learn more about how Sussex Community Foundation can help you give with purpose, visit here.
Jenn Trussler (TEP), Solicitor
Lily Parisi, Solicitor
Kreston Reeves Private Client LLP
Springfield House, Springfield Road, Horsham,
West Sussex, RH12 2RG
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