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Government and regulatory watch
Lifetime Legacies back on the agenda
, Added: 21 July 2008A consortium of third sector organisations, including Philanthropy UK, has welcomed renewed Government interest in the campaign for Lifetime Legacies.
A recent meeting of figures from the third sector designed to bring it back to the top of the agenda was attended by Margaret Hodge, Culture Minister, and Jane Kennedy, Financial Secretary to the Treasury. John Low, chief executive of the Charities Aid Foundation (CAF), said that their presence was “progress in itself”.
Lifetime Legacies are useful for people who wish to make a significant gift to a charity, but who need certainty over their future income.
Known in the USA as Charitable Remainder Trusts (CRTs), they allow donors to make an irrevocable gift to a charity during their lifetime, of shares, property or cash, while retaining the benefit of the income or use of the gift for the term of their life; the charity receives the asset upon the donor’s death. The donor can make deductions against capital gains tax at the time of the gift and its value is not counted as part of their estate for the purposes of inheritance tax.
Charities benefit because, unlike a charitable bequest, Lifetime Legacies require an irrevocable commitment, so that the charity can not only count on receiving the asset in the future, but also it can put the asset on its balance sheet today – thus enabling it to, for example, borrow against the asset to build at today’s costs, or use it to build up an endowment – which aids cash flow.
The meeting coincided with a letter to The Times which urged the Chancellor to include an evaluation of lifetime legacies in the Pre-Budget report this November. It highlighted that in the US, where tax relief is available on (CRTs), 40% of all donations to education, medical and arts charities come from CRTs. This saved US charities £4 bn last year. CRTs are also given tax relief in Australia, Canada and Germany.
Signatories of the letter included Lord Best, chair of the Giving Forum, David Emerson, chief executive of the Association of Charitable Foundations, and Susan Mackenzie, director of Philanthropy UK.
Philanthropy UK Director Susan Mackenzie said that the consortium “is hopeful that we will be able to work with Government to progress this important initiative”.
- A background paper on Lifetime Legacies is available on the Charity Tax Group website.
