Legacy Income – a long-term lifeline for charities
Stuart McKay · Posted on: December 12th 2025 · read
New data over the past few months has underlined how central legacies have become to charity finances and why policy changes around inheritance tax matter for the sector.
The joint Legacy Giving Report 2025 from Smee & Ford and Legacy Futures shows UK legacy income reached £4.5 billion in 2024, up around 9% from the prior year. A record 145,000 charitable bequests were made as the probate backlog eased, and legacies now account for around 30% of fundraising income and 14% of total income for the 1,000 charities receiving the most.
The Report shows that, over the long-term, legacy income has been a resilient income stream which has quadrupled in 30 years and is forecast to continue this strong growth, driven largely by the wealth and numbers of the Baby Boomer generation.
One in five adults now say they have written a charitable will, and Boomers already make up around a fifth of all legators, expected to dominate legacy giving within a decade.
Whilst the macroeconomic picture is challenging with cost of living pressures, squeezed middle-income household, and an increasingly demanding tax system, advisors consistently report that legacy giving is holding up well with some expecting further growth as more estates are nudged into inheritance tax and donors look harder at tax-efficient ways to support causes they care about.
Inheritance Tax and the Budget
The Autumn Budget confirmed that the main inheritance tax (IHT) thresholds will be frozen until April 2031. The Office for Budget Responsibility expects this prolonged freeze to push annual IHT receipts up to around £14.5 billion by 2030-31 from roughly £9 billion today as fiscal drag pulls more ‘ordinary’ estates into the net. Remember A Charity notes that this is likely to double the proportion of estates facing a bill over the next few years, making the IHT incentives for charitable legacies even more salient.
Crucially, the Budget did not dismantle those incentives. Gifts to UK-registered charities remain fully exempt from IHT, and where >10% of the taxable estate is left to charity, the rate on the remainder stays at 36%. For many donors, that makes a 10% charitable bequest a win-win scenario of supporting causes while leaving non-charity beneficiaries no worse off overall.
The Budget also confirms a wider package of charity tax compliance reforms. From April 2026, legacies received by charities will be treated as attributable income meaning they must be applied for charitable purposes; and the tainted-donation rules and approved-investment criteria are being tightened to focus more clearly on whether donors and connected parties receive any financial benefits.
"The Treasury has, however, clarified that there will be no requirement to spend legacy funds within a set timeframe following sector lobbying by Remember A Charity and the Chartered Institute of Fundraising."
About MHA Not-for-Profit eNews
MHA’s Not-for-Profit eNews provides regular insights on key developments affecting charities, education providers, and social enterprises. To discuss how these updates may affect your organisation, please contact a member of our Not-for-Profit Audit and Advisory team.
