Changing tax policy can transform the culture of legacy giving

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Changing tax policy can transform the culture of legacy giving

Published: 31 Dec. 2025, 00:03

Audio report: written by reporters, read by AI

Park Hun

The author is vice president for external affairs at the University of Seoul and the president of the Korean Association of Tax Law.

“I would like to give part of my assets back to society, but when it comes time to write a will, I feel lost.”

That was the concern recently shared by an acquaintance approaching retirement. Like many others, he did not want to pass everything he had accumulated over a lifetime solely to his children. He hoped to donate at least part of it to a meaningful cause. Yet the obstacles felt overwhelming. Korea’s high inheritance tax already seemed burdensome, and he feared that adding a charitable donation would leave too little for his family. More discouraging still was the belief that donations bring little meaningful tax benefit. In the end, he gave up.

On Dec. 30, a day before the close of the Salvation Army’s annual charity kettle campaign, a citizen makes a donation at a kettle set up along Myeongdong Street in central Seoul. [NEWS1]

This pattern is common. Many people say they would like to give if they had the means, but when the moment of inheritance arrives, most leave their assets entirely to family members. The reason is not a lack of generosity. It is the absence of a system that supports such intentions.

Korea has a proud tradition known as the “1 percent sharing movement.” It began in 2011 when senior managers at POSCO committed to donating 1 percent of their income to those in need. The movement resonated widely and helped plant the seeds of a giving culture. Yet while many share a portion of their income during their working lives, few manage to share anything at life’s end.

Britain addressed this problem through policy. In 2012, it introduced the “Legacy 10” scheme. Under the system, if an individual donates at least 10 percent of their estate to charity, the inheritance tax rate on the remaining assets falls from 40 percent to 36 percent. Britain’s inheritance tax structure is simple, with a single rate of 40 percent. Korea’s system ranges from 10 percent to 50 percent across five different brackets. For that reason, a uniform rate cut may be unrealistic. A more practical alternative would be to grant a 10 percent reduction in the calculated inheritance tax.

The results of Britain’s modest reform were striking. Lawyers now routinely tell clients drafting wills that donating 10 percent of their estate will also reduce their tax burden. Many respond that donating 10 percent therefore makes sense. Since the policy’s introduction, legacy giving in Britain has surged. It has become widely accepted that 90 percent goes to family and 10 percent to society. Just as Korea’s 1 percent movement encouraged giving during one’s lifetime, Britain’s 10 percent rule has helped establish a culture of giving at life’s end.

Korea, by contrast, has one of the highest top inheritance tax rates in the world, yet legacy donations remain rare. While donated amounts are excluded from taxation, this alone does not provide sufficient incentive. Consider a person inheriting 2 billion won. If they donate 200 million won, inheritance tax is levied on the remaining 1.8 billion won. Faced with high tax rates regardless, many prefer to leave as much as possible to their family. But imagine a system in which donating 200 million won also reduces the inheritance tax on the remaining assets by 10 percent. The calculation changes. Lower taxes and meaningful giving become possible at the same time.

On Dec. 20, 2022, award recipients pose for a commemorative photo at the second Good Donor Awards of Korea ceremony held at the auditorium of the National Assembly Library in Yeouido, Seoul. [THE KOREA COUNCIL OF CHARITIES]

According to a 2025 survey on perceptions of legacy giving conducted by Korea Gallup on behalf of the Korea Council of Charities, 53.3 percent of respondents said they would be willing to donate part of their estate if tax reductions were included in the law. That compares with just 29 percent who expressed willingness in the absence of institutional incentives. The intention exists. The system does not.

Some may worry that such reforms amount to tax breaks for the wealthy. But it is worth asking which is more effective: funds collected and spent by the state or resources voluntarily donated and used by public-interest organizations. In Britain, tax revenue declined slightly, but far larger sums flowed to charities, helping address gaps in social welfare. In Korea, discussions on reform have begun in the National Assembly and oversight of public-interest foundations is improving.

The time has come for a decision. Korea could promote a new culture of giving: 1 percent of income during life and 10 percent of assets at its end. Vague aspirations to donate “someday” could become concrete plans written into wills. As Britain’s experience shows, good institutions can turn goodwill into action. Building on the spirit of the 1 percent movement, Korea could open a new chapter in legacy giving.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.