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Consultation on moves to reduce inheritance tax

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The Government has published a consultation document on its plans to cut the rate of inheritance tax where a proportion of an estate is left to charity.

The measure was first announced in the last Budget.

It would mean that the inheritance tax rate drops to 36 per cent if 10 per cent or more of the value of an estate is bequeathed to charity.

Inheritance tax is normally due at 40 per cent above the nil-rate band, which stands at £325,000.

The aim is to encourage more people to leave more to charitable causes, and the Chancellor hopes the change would mean an increase of £300 million in the amounts left to charities.

The change is due to come into effect as from April 2012, but the Government is keen to hear views on how best to introduce the new policy.

Justine Greening, Economic Secretary to the Treasury said: “The Government’s philanthropy package announced at this year’s Budget represented the most radical reforms to charitable giving for more than twenty years and is designed to encourage further financial support for charities.

“This reduced rate of IHT should provide an extra incentive for people to use their estate to support worthy causes and we very much hope that this consultation will mean we can get the details right so it can make a real difference.”

The consultation runs until 31 August, and more details can be found at: