Gifts to qualifying UK charities and community amateur sports clubs, to political parties with representation in the House of Commons, to registered housing associations and to the national bodies listed in Schedule 3 to the Inheritance Tax Act 1984 are exempt from inheritance tax with no upper limit, in lifetime or on death. The exemption only works if the property passes to the body outright: gifts that are postponed, conditional, revocable or subject to a benefit kept by the donor can fail, and from 6 April 2026 property merely held on trust for charitable purposes no longer qualifies.

Which gifts are exempt, and is there a limit?

Recipient Provision Scope
Charities and registered clubs (CASCs) IHTA 1984 section 23 Any property
Qualifying political parties Section 24 Any property
Registered housing associations and social landlords Section 24A Real property in the United Kingdom only
National bodies in Schedule 3 Section 25 Any property

HMRC’s Inheritance Tax Manual confirms that none of these exemptions has a value limit (IHTM11101, IHTM11192, IHTM11211, IHTM11221). The party exemption was capped at £100,000 for gifts on or within a year of death made before 15 March 1988, but that limit is long gone. Each exemption covers lifetime gifts, gifts by will and the end of an interest in possession in settled property. GOV.UK puts it simply: there is no inheritance tax on gifts to charities or political parties.

What counts as a charity or a sports club?

For transfers from 1 April 2012, section 23 uses the definition of charity in Schedule 6 to the Finance Act 2010: a body or trust established for charitable purposes only that meets the jurisdiction, registration and management conditions (IHTM11112). The jurisdiction condition has narrowed. HMRC explains at IHTM11116 that from 15 March 2023, or 1 April 2024 for bodies that had already asserted charitable status, only gifts to UK charities are exempt. A legacy to an overseas charity, including one in the EU, is now chargeable unless it reaches a UK charity.

Registered clubs are community amateur sports clubs registered with HMRC. A club must be open to the whole community, organised on an amateur basis, exist mainly to provide sports facilities and meet location and management conditions (IHTM11140); the location condition also now requires a UK club (IHTM11141). Status is normally tested at the date of the transfer (IHTM11113).

What changed in 2026 for gifts held on charitable trusts?

Until recently property was treated as given to charity if it became the property of a charity or was held on trust for charitable purposes only. Section 78 of the Finance Act 2026 removed the second limb. For deaths on or after 6 April 2026, and for other transfers on or after 26 November 2025, the property must become the property of a charity or registered club (IHTM11101). A legacy to private trustees to apply for charitable purposes at their discretion, without the property passing to a charity, no longer qualifies.

Section 79 gives transitional protection where someone had an interest in possession before 26 November 2025, the property passes on its end to be held for charitable purposes, and it is given to charities within two years. Will drafting and older trust deeds both need checking against the new rule.

Which political parties qualify?

Section 24(2) requires that at the last general election before the gift either two members of the party were elected to the House of Commons, or one member was elected and the party’s candidates received at least 150,000 votes. Gifts to a party that fails the test are not exempt. HMRC adds at IHTM11191 that a lifetime gift to a non qualifying party is immediately chargeable, because a gift to a body of that kind cannot be a potentially exempt transfer.

How do the housing and national purposes exemptions work?

Section 24A exempts gifts of real property in the United Kingdom, including attached buildings, to a non profit registered provider of social housing, a registered social landlord or a registered housing association. Gifts of cash or shares to a housing association are only exempt if it is also a charity. HMRC asks its staff to refer every claim to its technical team (IHTM11211).

Section 25 covers bodies in Schedule 3, including the National Gallery, the British Museum, the National Museums of Scotland, the National Museum of Wales, the National Trust, the National Trust for Scotland, the Historic Buildings and Monuments Commission for England, Natural England, any local authority, any government department, any UK university and certain health service bodies. Two relaxations apply: the benefit of an agreement restricting the use of property can be given, and HMRC accepts at IHTM11223 that a memorandum of wishes letting the donor live in a house given to the National Trust does not defeat the exemption. Section 25(3) extends the exemption to objects accepted under the gifts to the nation scheme.

What conditions can make an exempt gift fail?

Section 23(2) to (5) sets out restrictions, and sections 24(3), 24A(3) and 25(2) apply them to the party, housing and national bodies exemptions too. A gift is not exempt if:

  • it takes effect only after another interest or period ends, such as residue left to a widow for life and then to charity, which is exempt only when the life interest ends (IHTM11174);
  • it depends on a condition not met within 12 months;
  • it can be defeated, unless it has not been defeated within 12 months and cannot be defeated afterwards (IHTM11173);
  • it is an interest less than the donor’s own or for a limited period, so a lease carved out of a freehold fails but a half share of the freehold does not (IHTM11176);
  • it is a building or real property given subject to a right for the donor, their spouse or a connected person to occupy rent free or below market rent; or
  • any part of the property could be used for purposes other than those of the exempt body.

How do these exemptions fit with the rest of the estate?

A charitable legacy can also bring the rate on the rest of the estate down to 36% if it is at least 10% of the baseline amount; see the 36% rate. An estate where only spouse or charity exemption brings the chargeable value within the nil rate band, and the gross value is no more than £3 million, can, subject to further conditions, be an excepted estate (IHTM06013). Lifetime gifts to charity also attract Gift Aid relief for cash, and no capital gains tax on assets, covered in giving assets to charity. Where pension funds come within inheritance tax from 6 April 2027, new section 23(5B) treats a pension benefit paid to a charity as covered by the exemption.

How might this work in practice?

Illustration only. Alan, single and with no home, dies in July 2026 leaving £1,000,000. His will gives £100,000 to a registered UK charity, £20,000 to a party with several MPs, a painting worth £30,000 to the National Gallery and the residue of £850,000 to his niece. All £150,000 of gifts are exempt. The chargeable estate is £850,000, and after the £325,000 nil rate band, tax at 40% is £210,000, before considering whether the 36% rate applies.

Had the will instead left the £100,000 to his executors to distribute among charitable causes of their choosing, without the money having to pass to a charity, that gift would now be chargeable too.

What mistakes come up most often?

  • Leaving money to an overseas charity or a sister body abroad without a UK registered recipient.
  • Assuming any party donation is exempt, or that a lifetime gift to a party is potentially exempt.
  • Attaching conditions or reserving use of the gifted property.
  • Using older will precedents that leave property on general charitable trusts.
  • Not checking CASC or charity status, which HMRC can verify against its records.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.