High net worth individuals (HNWI) should factor charitable giving into their financial planning strategies as a tool for managing future tax liabilities amid changes to inheritance tax (IHT) rules, St. James’s Place (SJP) has said.

Following the publication of HMRC’s latest statistics on charity tax relief in the UK, which showed a return to the long-term trend of year-on-year growth, HNWIs were encouraged to consider charitable giving in light of the IHT changes.

HMRC’s figures for the tax year to April 2025 revealed that tax reliefs for charities and their donors were around £6.7bn, a year-on-year increase of 5 per cent.

This included £980m of IHT reliefs for donations, an increase of 2 per cent year-on-year, and £820m of relief at higher rates of tax on individuals’ gift aided donations, up by 8 per cent year-on-year.

SJP head of private clients, Iain McLeod, said it was positive to see that UK charity relief statistics had returned to year-on-year growth.

“The UK offers some of the most generous tax incentives for charitable giving, but the system can be complex and is often underutilised,” he added.

McLeod noted that, as more estates were being drawn into the scope of IHT due to pensions becoming subject to the tax from April 2027, charitable giving could become a more prominent part of estate planning.

“Charitable donations are exempt from IHT, and estates that leave 10 per cent or more of their net value to charity can benefit from a reduced IHT rate of 36 per cent,” he explained.

“While tax return data naturally lags, it's notable that fewer individuals declared donations via self-assessment for the tax year ending April 2024.

“It highlights the need to ensure people are actively claiming all available reliefs and allowances.

“We encourage individuals to factor charitable giving into their holistic financial planning strategies, not only as a way to support the causes they care about, but also as a powerful tool for managing future tax liabilities.”

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