Setting up a charity – a legacy for those with Inherited and earned wealth alike

Published: 10th December 2021
Area: Family

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12 Days of Christmas - Day 10: Lords are leaping

The recently published CAF UK Giving Report 2021 revealed that although the number of people giving to charities decreased in the last year, those that did were more generous. And there was a particular increase in the size of charitable donations amongst older adults.   

As people with significant personal wealth get older and start to think about their legacies, as well as taking care of their own families, it appears that many look to provide assistance to those less well-off.  

One of the ways that those with substantial wealth look to do this is through the setting up of a charity, either via their will on death, or during their lifetime.  

Why set up a charity?

While a person may decide to leave individual gifts to charities under their wills or make regular gifts during their lifetime, those with more substantial wealth may instead choose to set up a grant-making charity. This creates an ongoing legacy and ensures funds are managed to provide financial assistance to causes particularly close to their hearts for years to come.   

Setting up a charity can have a number of tax advantages too, both for the individual and the charity. Most of the income and capital gains of a charity are tax-free and charities can also claim back the income tax that has been deducted from donations through the Gift Aid scheme.  

From an estate planning point of view, gifts to UK charities on a person’s death can be appealing as they are free of Inheritance Tax. On top of this, if 10% of a person’s assets on their death are left to charities, the rest of the estate can qualify for a reduced rate of Inheritance Tax. This can, in certain circumstances, reduce the overall Inheritance Tax payable on a person’s death. 

Setting up a structure to give back to worthy causes can be fairly straightforward through the creation of a charitable trust. However, those considering this should take advice on the most suitable structure given their circumstances, the kind of activities the charitable will be undertaking, and the assets the charity will hold. 

The small print

It is important to remember that most charities other than the very smallest will need to be registered with the Charity Commission in order to be recognised by HMRC and gain the tax advantages that come with charitable status.  Those setting up a charity need to be aware of the requirements and conditions of registration from the outset when preparing their governing document and deciding on their objectives.  

Although running a charity can be very rewarding, it is important that the administration and reporting requirements are fully complied with and the charity is properly managed.  

If this is the route you would like to explore to ensure that your wealth is leaping into action for those less fortunate, the team can advise and assist with the setup and ongoing running of a charity and ensure that all taxation and reporting requirements are fully met with, allowing those that run the charity to get on with the work of benefitting worthy organisations and individuals leaving those charitable trustees leaping for joy! 

Get In Contact

As head of our contentious probate team, Andrew handles a wide variety of disputes for local, national and international clients. He has particular expertise in dealing with disputes regarding high value and complex estates, often including cross-border elements.


Leaving money to charity in your will can ensure your chosen charity beneficiaries reap the rewards of your hard work, while you benefit from the financial incentives too. We can advise you on the best way to structure and approach your charitable affairs.

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