IHTM11126 - Procedure: identifying the beneficiary

Before you can decide whether the beneficiary has the required charitable status (IHTM11112), you have to decide precisely who the beneficiary is. Normally this is straightforward but you need to be careful. For instance

  • there may be related organisations with similar names, one of which is a qualifying charity and one of which is not (see Example 1 (IHTM11127)).
  • a gift to an individual who is known for charitable work might be a gift to that individual personally (and so not charitable) or for charitable work associated with that individual (see Example 2 (IHTM11127)
  • the gift may be subject to a trust.
  • the intended charity may be wrongly named.
  • the charity named may have changed its name since the Will was written.

The identity of the beneficiary depends on the exact terms of the gift in the Will (IHTM12041) (or other relevant instrument). So you need to read the clause containing the gift very carefully. If the beneficiary is not a charity, the gift cannot qualify for exemption.

Where the gift is to a non-qualifying body (as in Example 1 (IHTM11127)) or an individual (as in Example 2 (IHTM11127)), the executors sometimes pay the legacy to a related qualifying body or charity instead of to the beneficiary identified in the will. Or, for example, a church dignitary who has been left a legacy by a stranger may pass it on to a recognised charity. Any such payment or action does not make the gift charitable unless a variation (IHTM35011) within IHTA84/S142 (1) effectively substitutes the UK charity for the original beneficiary for IHT purposes.

Where the terms of the Will are clear, those terms are decisive. But the terms may not be clear, for example where the name of the intended charity is misquoted or has been changed. In these circumstances IHTM11135 may enable you to accept that the beneficiary is a charity. If not you may ask the taxpayer or agent whether there is any extrinsic evidence pointing to the identity of the beneficiary.

You may accept that the gift is to a charity if

  • it is of a reasonable amount, and
  • on the basis of the information you have, the taxpayer or agent has paid it to a qualifying charity.

In other cases and the issue is one of the identity of the beneficiary (for example the Will refers to ‘cancer research’, ‘disabled children’, ‘conservation’ or ‘animal welfare’. You should deny the exemption in the first instance, but draw the taxpayer or agent's attention to the 'Royal Sign manual procedure'. This enables a legal direction to be made as to the charity that most nearly reflects the testator’s intention. Further details of this procedure are available from the Government Legal Department. Any direction made under this procedure will be accepted as being within IHTA84/S23 at the relevant time.

If you ask the taxpayers any questions about the identity of the beneficiary or its status, you need to check their replies carefully.

  • Is the body clearly a qualifying charity?
  • Is the charity registered under the Charities Act 2011 and, if so, what is the registration number?

You should refer any case of doubt to Technical.