Fewer people are leaving money to charity in their wills — a blow that could cost the sector £1.5 billion.

About 31 per cent of those who wrote wills this year left money to a charitable cause, down from 46 per cent in 2024. But of those who did intend to leave a charitable gift, 13 per cent said they would leave £50,000 or more, according to a survey by the wealth manager Rathbones.

Last year charities benefited from about £4.5 billion in bequests. Assuming that the value of estates stayed the same, a drop in the proportion leaving money to charity from 46 per cent to 31 per cent would represent a loss of about £1.5 billion, Rathbones said.

Donations can be a valuable tool for reducing the inheritance tax that may be due on your estate. If you leave more than 10 per cent to charity, the inheritance tax rate on the rest of it is reduced from 40 per cent to 36 per cent.

Increasing numbers of families face being stung by inheritance tax thanks to frozen thresholds and other measures announced by the chancellor, Rachel Reeves, including bringing private pensions into the inheritance tax net from April 2027.

Farmers and small business owners will also pay more from next year when agricultural property relief and business property relief, which at the moment give them a 100 per cent exemption from inheritance tax, is capped at £1 million. Assets above that will qualify for 50 per cent relief, which means they will pay inheritance tax at a rate of 20 per cent, instead of 40 per cent.

• Why giving to charity can cut your family’s inheritance tax bill

The inheritance tax-free allowance — the amount of your estate you can leave to someone other than a spouse or civil partner without them having to pay any tax — has been frozen at £325,000 since 2009 and will remain so until April 2030. You get another £175,000 allowance if you leave your main home to a direct descendant, such as a child, step child, or grandchild. Anything left to a spouse or civil partner is completely free of inheritance tax.

According to HM Revenue & Customs, inheritance tax raised £5.2 billion between April and October — a £200 million increase from the same period last year.

Andy Pitt, the head of charities at Rathbones, said: “The generosity of the British public is resilient and a vital force for good, with legacy giving offering hope for the future; but there needs to be increased awareness of its benefits, improved guidance and a reassessment of any related complexity or red tape.”