Brexit Warning for UK Charities

Brexit has implications for French Residents leaving a legacy to UK Charities.

Here, we look at why Brexit means you should think twice about leaving your French estate to a UK Charity.

If you live in France and want to make a legacy in your Will to a UK Charity, then unfortunately once the Brexit transitional period ends on 31 December 2020, there will be no tax exemption for legacies to UK charities.

The charitable exemption for inheritance tax depends on whether or not here is a tax treaty agreeing equal tax treatment for charities between the two countries. 

The relevant tax treaty for the UK is the treaty of 21 June 1963.  Unfortunately it does not specifically address the tax treatment of charities. 

For EU and EEA members there is mutual charitable tax treatment, but as a non EU/EEA member it is not certain that a UK charity would be allowed a tax exemption, and may be taxed at 60%.   Likewise, if a British resident left a legacy to a charity registered in France, then the UK would tax it without special treatment.  If the estate exceeds the nil rate band then 40% UK inheritance tax would apply.

I have written to the Brexit Secretary to bring this to their attention and have proposed a legislative amendment on behalf of charities. For now, if you are wanting to leave a legacy to a charity, it is best to choose one that is registered as a charity in the country that you live in. If you live in the UK, choose a UK Charity, if you live in France, choose a French (or EU / EEA) charity.

We are here to help, so Pplease contact us for any assistance. We may be able to find alternative ways to help you ensure that you benefit the charity. If you are a UK charity receiving a legacy, please contact us as for guidance, as this is a complex area of law that needs to be very carefully navigated.