A conversation with Paul Egan, Financial Adviser, Hill Johnstone Wealth Management, St. James’s Place
Author: Hannah Shakespeare | Date: 13th October2026
With inheritance tax changes due to come into effect from April 2027, many people are reviewing their estate planning arrangements. One option that can benefit both families and charitable causes is leaving a gift to charity in your Will.
We spoke to Paul Egan, Financial Adviser at Hill Johnstone Wealth Management, St. James’s Place, about charitable giving, inheritance tax planning and how thoughtful estate planning can support the people and causes you care about most.
Many Railway Children supporters choose to give regularly because they are passionate about helping vulnerable children around the world. While charitable giving is often motivated by a desire to make a difference, it can also play an important role in wider estate planning and inheritance tax planning.
When discussing charitable giving, Paul is quick to point out that tax efficiency is rarely the main motivation.
“For most people, charitable giving isn’t about saving tax, it’s about supporting a cause that matters to them. The tax rules simply mean that, in some circumstances, the Government effectively shares part of the cost.”
For UK taxpayers, many donations made during a person’s lifetime can qualify for Gift Aid, allowing charities to reclaim basic rate tax at no extra cost to the donor. Higher and additional rate taxpayers may also be able to claim further tax relief through their tax return.
Charitable giving can also play an important role in inheritance tax planning, as gifts to qualifying charities are generally exempt from inheritance tax immediately.
Ultimately, Paul says, it’s about finding ways to support the causes you care about while making the most of the available tax rules.
Inheritance tax has been the subject of significant discussion in recent months, particularly in relation to pensions.
Historically, pensions have often been one of the most tax-efficient assets to pass on to future generations because they generally sat outside an individual’s estate for inheritance tax purposes.
However, from April 2027, the Government intends to bring most unused pension funds and pension death benefits into the scope of inheritance tax.
“That won’t affect everyone,” says Paul, “but it does mean more families may want to review their estate planning because pensions could now form part of the value of their estate for inheritance tax purposes.”
A common misconception is that inheritance tax only affects the very wealthy. According to Paul, that is increasingly not the case.
“Rising property values, investment growth and the proposed pension changes mean more families may find themselves approaching or exceeding the available inheritance tax allowances.”
He adds that many people underestimate the overall value of their estate until they take stock of everything they own.
“The important thing is understanding what your estate may be worth. Many people are surprised when they add together their home, savings, investments and pensions.”
The short answer is yes.
Every pound left to a qualifying charity is generally removed from the value of an estate before inheritance tax is calculated.
There is also an additional rule that can offer further advantages. If at least 10% of a person’s net estate is left to charity through their Will, the rate of inheritance tax on the remaining taxable estate may reduce from 40% to 36%.
“It’s always worth taking advice because every estate is different,” Paul says, “but for many people that’s a really valuable planning opportunity.”
Importantly, Paul stresses that tax benefits should not be the sole motivation for charitable giving.
“It’s not about giving because of tax. It’s about recognising that if charitable giving is already important to you, there can also be tax advantages.”
Another important distinction is the way gifts are treated for inheritance tax purposes.
If money is given to children, grandchildren or other family members during a person’s lifetime, those gifts may still form part of the estate if the donor dies within seven years.
Charitable gifts are different.
“Gifts to qualifying charities are generally exempt from inheritance tax immediately and aren’t subject to that seven-year rule.”
This means charitable donations can offer both immediate support to causes you care about and potential inheritance tax benefits.
If somebody wants to leave money to charity, inheritance tax rules can sometimes create an unexpected outcome.
As Paul explains:
“Gifts to qualifying charities are generally exempt from inheritance tax. But there’s an additional incentive built into the inheritance tax rules. Normally inheritance tax is charged at 40%. However, if you leave at least 10% of the relevant part of your estate to charity, the rate applying to the remainder of that part of the estate can reduce to 36%.”
This can mean that someone who is already planning to leave a charitable gift in their Will may find that increasing their gift sufficiently to qualify for the reduced rate allows both the charity and their family to benefit.
A simplified example helps demonstrate how inheritance tax and charitable giving can work in practice.
Imagine that, after the relevant inheritance tax allowances have been taken into account, the figure being used for the charitable giving calculation is £500,000.
If someone has already decided to leave £40,000 to charity, this represents 8% of the £500,000. As this falls below the 10% threshold required to qualify for the reduced rate of inheritance tax, the remaining £460,000 would be subject to inheritance tax at the normal rate of 40%.
In this example, that would mean an inheritance tax bill of £184,000, with £276,000 passing to the family from that portion of the estate.
If the charitable gift is increased from £40,000 to £50,000, it now represents 10% of the £500,000. The remaining taxable amount of £450,000 would therefore qualify for the reduced inheritance tax rate of 36%.
The inheritance tax bill would fall to £162,000, with £288,000 passing to the family.
As Paul says:
“By increasing the charitable gift by £10,000 in this example, the charity receives £10,000 more, but the family also receives £12,000 more. That’s because the inheritance tax bill has reduced by £22,000.”
The exact outcome will depend on the size and make-up of each estate, which is why professional financial advice is recommended.
When it comes to choosing between supporting charities during your lifetime or leaving a gift to charity in your Will [hyperlink to wills page], there is no one-size-fits-all approach.
Some people value seeing the impact of their donations while they are alive. Others prefer to leave a legacy gift in their Will as part of the difference they want to make in the future.
As Paul points out, many people choose to do both.
A gift in your Will can help Railway Children reach vulnerable children and young people in the UK, India and Tanzania long into the future.
Legacy gifts help fund life-changing support, enabling children to access safety, protection and opportunities for a brighter future. Whether large or small, every gift can help ensure vulnerable children receive the support they need when they need it most.
For many supporters, a charitable gift in a Will becomes a lasting reflection of the values and causes that have mattered to them throughout their lives.
For anyone wondering whether the proposed inheritance tax changes could affect them, Paul’s advice is simple.
“Start by understanding what your estate might be worth. Then have a conversation with a financial adviser and, where appropriate, a solicitor.”
Ultimately, he believes estate planning is about more than tax.
“For me, estate planning has never really been about tax. It’s about making sure more of what you’ve worked hard to build ends up with the people and causes you care about. If you can achieve that, that’s a positive outcome.”
If you would like to learn more about leaving a gift to Railway Children in your Will and the difference your support could make to vulnerable children and young people, please click here for more information or contact Lizzi Hollis, Partnerships and Philanthropy Manager by emailing l.hollis@railwaychildren.org.uk or call 01270 757 596.
Please note advice in relation to Wills involves the referral to a service that is separate and distinct to those offered by St. James’s Place. Wills are not regulated by the Financial Conduct Authority.
Hill Johnstone Wealth Management ltd is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the group’s wealth management products and services, more details of which are set out on the group’s website https://www.sjp.co.uk/products. The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.
SJP Approved 12/10/2026
Yes. Gifts left to qualifying charities are generally exempt from inheritance tax and can reduce the value of a taxable estate.
Leaving at least 10% of the relevant part of your estate to charity may reduce the inheritance tax rate on the remaining taxable estate from 40% to 36%.
Gifts to qualifying charities are generally exempt from inheritance tax, whether made during your lifetime or left in your Will.
Unlike many gifts made to family members, charitable gifts are generally exempt from inheritance tax immediately and are not usually subject to the seven-year rule.
Yes. Many supporters choose to leave a legacy gift to Railway Children, helping vulnerable children and young people long into the future.
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