Inheritance tax (IHT) is applied to estates worth more than £325,000 (known as the nil rate band). IHT is charged at a rate of 40% on anything above the nil rate band. For example, an estate worth £400,000 would result in a tax bill of £30,000 (40% of £75,000).   Charities are exempt from paying IHT, meaning that gifts to charity in your will do not count towards the nil rate band. So, using the example above, a charitable legacy of £75,000 would mean that an estate worth £400,000 would not attract any inheritance tax. You can reduce tax on your estate if you leave 10% or more to charity in your will: Inheritance tax reduces from 40% to 36%. You should speak to your adviser to ensure the wording of your will takes advantage of this. For more information about inheritance tax, visit the government website www.hmrc.gov.uk/inheritancetax