The reduced rate of inheritance tax (from 40 per cent to 36 per cent) for those who leave 10 per cent or more of their net estate, (after deducting exemptions, reliefs and the nil rate band) to charity, may encourage a deferral of giving, says private client law firm Boodle Hatfield.

The firm said that it is entirely feasible that, rather than just leaving cash to charity, investments, a work of art, a property or any other asset could be donated to a charity and such a legacy would count towards the 10 per cent.

“No legislation is yet in place, but the announcement appears not to factor in life time giving and one unexpected result might be a deferral of giving until death, with the inheritance tax savings outweighing the tax advantages of lifetime giving,” said Fiona Graham, partner in the private client team at Boodle Hatfield.

The firm noted that such a measure would “run against other measures unveiled recently by the Government to encourage private giving to the arts”, giving as examples the consultation over the summer on tax breaks for people who make lifetime donations of pre-eminent works of art or historical artefacts to the nation, and an £80 million scheme to match private donations with public funds.

“The government may yet need to revisit its plans to encourage greater private giving to the arts,” added Graham.

Boodle Hatfield is a 33-partner law firm, which practises from offices in central London and Oxford.