This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.


Our lawyers are experts in their fields. Through commentary and analysis, we give you insight into the pressures impacting business today.

| 3 minutes read

Wills & Probate Update - June 2023

Brexit prompts withdrawal of tax relief for European charities and European agricultural land

As part of the Spring Budget 2023, it was announced that the definition of a charity for UK tax purposes would be changed, so that only those charities located in the UK can qualify for charitable tax reliefs – not those located in the European Union ("EU") or European Economic Area ("EEA"). It was also announced that, from 6 April 2024, the geographical scope of inheritance tax ("IHT") agricultural property relief ("APR") and IHT woodlands relief will be limited to agricultural property or woodlands situated in the UK only. Legislation to bring into effect these changes is included in the Finance (No 2) Bill 2023 currently going through Parliament. These developments have been necessitated by Brexit.

EU/ EEA charities

The tax definition of a charity applies to determine charitable tax reliefs and exemptions for the purposes of UK Gift Aid, income tax, capital gains tax, inheritance tax, corporation tax, stamp duty, stamp duty land tax and stamp duty reserve tax. Up until the Spring Budget announcement, EU/ EEA charities could apply to HM Revenue & Customs ("HMRC") to qualify for UK charitable tax reliefs.

With effect from the "relevant date" (explained below), UK tax relief will no longer apply to EU/ EEA charities. This has the following impact in a Private Client context.

Individuals naming a EU/ EEA charity as a beneficiary of their Will – the IHT charity exemption will not apply and the individual's estate will need to pay IHT on the gift to the EU/ EEA charity. In addition, where the gift to the EU/ EEA charity may enable the overall estate to qualify for the reduced rate of IHT (36%), this will no longer be the case and the standard IHT rate will apply to the whole estate (40%). For large estates, this could have a significant impact and the Will may need to be amended in order for the 36% rate to continue to apply.

  • Trustees of trusts that include a EU/ EEA charity as a beneficiary - the IHT charity exemption will not apply to any capital distributions to the charity that trigger an IHT exit charge and the IHT must be met from the trust fund.
  • EU/ EEA charities that receive donations from UK individuals or distributions from UK trusts or estates – UK tax relief can no longer be claimed meaning, for example, that the charity will receive the funds net of UK income tax (without the benefit of Gift Aid, where applicable).

The "relevant date" is 15 March 2023 for any EU/ EEA charity that HMRC has not previously accepted as qualifying for UK charitable tax reliefs; and 1 or 6 April 2024 (depending on the tax concerned) for EU/ EEA charities that HMRC accepted, before 15 March 2023, as qualifying for such reliefs.

European agricultural land and woodlands

The change to the geographical scope of IHT APR and woodlands relief means that APR will, from 6 April 2024, no longer apply to agricultural land in the EEA, the Channel Islands and Isle of Man, and woodlands relief will no longer apply to woodlands in the EEA.

APR reduces the value of any gifts of qualifying agricultural property for IHT purposes. The relief is generally given at 100% of the agricultural value, although it can be at 50% in some circumstances. In either case, APR is extremely valuable as the value of the property would otherwise be subject to IHT at 40%.

Woodlands relief operates as an IHT deferral whereby the value of the timber (but not the land) can be excluded from the calculation of IHT on death. The deferred IHT is brought back into charge when the timber is sold or given away.

These changes to the scope of APR and woodlands relief will have the following impact in a Private Client context.

  • Individuals with affected agricultural land or woodlands within the ambit of their UK Will – IHT relief will no longer apply and the estate will need to fund the resulting IHT on death. Where the UK Will includes a "nil-rate band discretionary trust", this change in IHT position may automatically alter who receives the land/ woodlands under the Will. Affected individuals are advised to review their Wills to make sure the land/ woodlands pass as intended. An amended Will may be needed.
  • Trustees and executors of trusts or estates that include affected agricultural land or woodlands – IHT relief will no longer apply on a distribution of such land/ woodlands to beneficiaries under the Will or trust, and the trustees/ executors will need to fund the IHT from the trust/ estate.


privateclient, privateclientupdates, charities, iht, estateplanning, apr, brexit