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The number of millionaires leaving charitable donations of more than £1m in their wills has swelled by almost a third.
Seven figure transfers to charities on death increased by 31pc to 3,043 in 2017-18, up from 2,328 the previous year, a freedom of information request containing the most up-to-date figures has revealed.
Experts said wealthy individuals were most likely leaving as much as 10pc of their estates to good causes to make the most of generous inheritance tax breaks.
Big donations benefit from a large death tax discount, where the rate drops from the typical 40pc to 36pc if at least a tenth of an estate is left to charity.
The perk was behind the gradual increase in significant charitable donations, with the trend likely to have continued given the increasing amount of families caught by IHT, according to Eleanor Sepanski of law firm Boodle Hatfield.
This will have encouraged rich families to give more and save on tax, while helping to support good causes.
Today charities are facing a £10bn funding shortfall because of the pandemic, according to consultants Pro Bono Economics.
Ms Sepanski said sizeable gifts left by estates could help make up the shortfall from the wider population, who have reigned in donations.
How the Inheritance Tax take has soared
“Charitable giving upon death offers a huge financial boost for many charities. However, wealthy individuals should consider switching to lifetime giving rather than waiting to donate a lump sum to charities upon death – particularly as the sector urgently needs help, “ she said.
Lifetime gifts qualify for Gift Aid tax relief, which allows charities to claim an extra 25p for each £1 donated. Regular giving can also limit death tax bills.
You can make tax free gifts of up to £3,000 each year, or larger gifts which will fall out of your estate for tax purposes as long as you survive the gift for seven years.
Claiming relief against the death duty has grown in importance as rising property prices has broadened the spectrum of people caught by the levy, with both tax receipts and the number of people who pay trending upwards over the past decade.
Around 25,000 people pay the toll each year, with receipts last year reaching £5.2bn. The £325,000 tax free threshold has not changed since 2009. Had it kept pace with inflation, families would be able to pass on roughly £100,000 more today.
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