New guidance on the reduced 36% rate of Inheritance Tax which applies where at least 10% of a person's net estate is left to charity has now been published in HMRC's Inheritance Tax Manual on the HMRC website. This replaces the temporary guidance and follows the Finance Bill 2012 receiving Royal Assent on 17 July 2012. The reduced rate only applies to deaths occurring on or after 6 April 2012.

In the legislation the word charity has the normal meaning for Inheritance Tax purposes and includes registered community amateur sports clubs and organisations in the European Economic Area that meet the requirements for being a charity. The reduced rate of tax only applies to charges that arise on death.

To qualify for the reduced rate, the charitable giving condition must be met.

A new schedule to form IHT400-IHT430-will be designed to help gather the correct values to calculate whether the charitable giving condition is met, and to reflect the reduced rate when calculating the tax due on delivery of form IHT400.

An on-line charitable legacy calculator has also been developed and is available on the HMRC website. Taxpayers and agents are encouraged to use this calculator, to print out the results sheet and send it to HMRC, with form IHT430, when an account is being delivered.