June Spencer, the actress who plays Peggy Woolley in The Archers, and has done so for longer than I have been alive, celebrated her 100th birthday on Friday June 14th 2019. It’s heartening, if rare, to see a centenarian in such good health and able to continue doing something for which she has a talent and enjoys, and which gives pleasure to others.
Congratulations and very best wishes to her.
As a tribute, the scriptwriters devised an important scene for her character, an imperious Ambridge matriarch, to make an announcement to some of her extensive local family — with a speech in which she sounded remarkably like the woman who sent the actress a telegram on her 100th birthday. This isn’t the first such occasion for Peggy — five years ago she told her three adult children that she had inherited only a modest share of her multi-millionaire second husband Jack’s estate, and of some changes she had made to her own will, waving away the protests of her disappointed beneficiaries with a plate of fondant fancies.
Here she is on Friday -
Peggy: I’ve called you all together, the heads of our family farms — Home Farm, Bridge Farm and Brookfield. I want to let you know that I will be offering some money to whoever comes up with the best sustainable farming idea. I met with my financial adviser again this week. We’re in the process of setting up a charitable trust. I’d like you to pass the information on to the younger generations of your respective farms.
Pat: How will you decide which idea is best?
Peggy: I’ll be sourcing a panel of experts to judge the ideas
Brian: How much money are you talking about, Peggy?
Peggy: I’m pleased to tell you that the Ambridge Conservation Trust will be offering a prize fund of half a million pounds
Tony: How much!
Peggy: Half a million pounds
Birdsong, but no fondant fancies, followed. Half a million pounds would buy about 30,000 boxes of them.
I thought this idea was a touching tribute to a long life at the heart of the Archers — a story about being actively involved in creating a philanthropic legacy for the future — philanthropy with farm gates, not Bill Gates. It’s surprising in a way that there hasn’t been more of a history of philanthropy in Ambridge. The survival of ancient charities, created by wealthy benefactors long before any institutional form of social security, public healthcare or education existed, are markers of history and of a sense of place in cities, towns and villages across the country, for a charitable trust can continue in perpetuity, as a private trust cannot.
For example, these almshouses in Ashbourne in Derbyshire were founded under the will of Roger Owfield, a London fishmonger who had come from Ashbourne. On his death in or about 1612 he gave a legacy of £100 to build almshouses for eight poor people of Ashbourne. His widow Thomasina completed the building at her own expense of a further £76, and she and her son and later benefactors also provided permanent funds to pay the almshouse dwellers a weekly allowance.
In Dorset, the will of the famous chemist Robert Boyle, who died in 1691, directed his executors to use his estate for charitable and other pious and good uses at their discretion “but I do chiefly recommend unto them the laying of the greatest part of the same for the advance or propagation of the Christian religion against infidels”. Under a court-approved scheme of 1697, one of these charitable uses was building a school house for boys at Yetminster and purchasing land for the maintenance of the schoolmaster. Boyle’s Education Foundation still survives as a charity today, having been modernised in the 1950s to provide financial assistance for the education and training of both boys and girls in the parishes of Yetminster, Leigh and Chetnole.
But adventures in philanthropy are not always so admirably altruistic, and the further from altruism and the closer to pure vanity and indulgence of the would-be philanthropist’s eccentricity, the less likely they are to be legally recognised as charities. Gifts and memorials to pets are often problematic, but Peggy’s ferocious (or in Peggy’s words “sweet” and “much misunderstood”) feline, Hilda, was not mentioned in her announcement. In late Victorian Oban, on the west coast of Scotland, in 1896 the last surviving son of the M’Caig family built a circular stone tower on some land he owned on the summit of Battery Hill, a rocky outcrop rising about 220 feet above sea level above the town. His sister, the last survivor of the family, inherited this property incomplete at his death, and in her will directed that it should be turned into a private enclosure and that around the tower bronze statues of her parents and brothers and sisters and herself were to be erected, each at a cost of no less than £1,000 “and to bear suitable inscriptions” and be maintained out of a perpetual charge on her estate. This grandiose bronze vision dissolved under the weighty granite prose of the judges of the Court of Session, who ruled against its validity in 1915, one describing it as merely gratifying “an absurd whim which has neither reason nor public sentiment in its favour” and saying
“ . . . the prospect of Scotland being dotted with monuments to obscure persons who happened to have amassed a sufficiency of means, and cumbered with trusts for the purpose of maintaining these monuments in all time coming, appears to me to be little less than appalling.”
The word “dotted” here perfectly, if unintentionally, echoing the “dottiness” of Miss M’Caig’s vision, and the judges sparing the beautiful west coast of Scotland from becoming a whisky-glassed vision of the future North Korea.
Half a century later, in England, Arthur Pinion, an artist of upper class background but mediocre talent left a will with directions that his Notting Hill studio, containing his own paintings and others that he had collected, together with various objets, should be turned into a museum. He had in mind something like the John Soane Museum in Lincoln’s Inn Fields and hoped that the National Trust would be interested in taking it on. They were not. Nor were the judges of the High Court and Court of Appeal who, quoting from the distinguished art historians who gave evidence about the quality and educational value of the collection, ruled against its status as a charity. They described Arthur Pinion’s own painting as “atrociously bad” and the paintings and objects he had collected as “absolutely worthless”. There were “a dozen chairs which might perhaps be acceptable to a minor provincial museum”. And
“apart from pictures there is a haphazard assembly — it does not merit the name collection, for no purpose emerges, no time nor style is illustrated — of furniture and objects of so-called “art” about which expert opinion is unanimous that nothing beyond the third-rate is to be found. Indeed one of the experts expresses his surprise that so voracious a collector should not by hazard have picked up even one meritorious object.”
They concluded that “there was no useful object to be served in foisting upon the public this mass of junk.”
As far into modern times as 1965, this is the withering patrician language of men self-assured in their judgment of traditional works of art by traditional standards.
What does all this have to do with Peggy Woolley’s Ambridge Conservation Trust? In order to be a valid charity, as she clearly intends, it must not only have a recognisable charitable purpose, but a sufficient element of public benefit — which was what was missing in the vanity memorial and museum cases. Charitable purpose is not a problem here, as there are several legally recognised purposes which might fit in with Peggy’s intentions. The most obvious are the advancement of environmental protection or improvement, and the advancement of animal welfare, or even the catch-all “any other charitable purpose”, of which the promotion of agriculture is one of the examples given by the Charity Commission in its published guidance.
The seeming flaw in Peggy’s plan is the lack of public benefit, if all that there is to the Ambridge Conservation Trust is a fund to award a one-off prize for a sustainable farming idea, and the only eligible contestants for the prize are to be members of Peggy’s family farming in Ambridge. A valid charity must be beneficial, and not harmful (as for example, a library of pornography would be), and it must either benefit the public in general, or a sufficient section of the public. This means that generally the inhabitants of a parish or town, or any particular class of such inhabitants can qualify as a sufficient section of the public, but private individuals or a class limited to the descendants of a particular individual (unless they are “poor relations”), cannot. So if the Ambridge Conservation Trust is drafted in such a way as to demonstrate that it will operate for the benefit of all the inhabitants of the parish of Ambridge, or some other defined geographical area, and that all the inhabitants, or perhaps a sufficient section of them who are occupied in farming within the defined geographical area are eligible to put forward sustainable farming ideas for her prize, it should qualify as a charity.
Will a trust which creates what seems to be a one-off prize for the individual who comes up with the best sustainable farming idea be charitable, even if eligibility for it is not limited to Peggy’s descendants? As perpetuity is rather the point of creating a charity, it seems odd to design it as a one-off award, but a recurring prize of £0.5M would need a far larger endowment to begin with. It’s quite surprising that she even had as much as £0.5M to spare for charity, given recent investment conditions. It would take rather more than frenetic purchases of fondant fancies from Underwoods to trigger an Unexplained Wealth Order of the kind recently served on a woman who spent £16M at Harrods, so we may never know. Perhaps the Ambridge Conservation Trust fund is to continue indefinitely, but award smaller prizes. In any event, although a legally valid charity can make awards to individuals, these awards must be incidental to furthering a charitable purpose. So the trust would have to strictly dictate that the winner must use the prize towards making the sustainable farming idea a reality, and not for any other purpose.
But perhaps these seeming flaws in Peggy’s philanthropy are really all intentional, making it for the time being more of an Ambiguous than an Ambridge Conservation Trust. Will she have to reconsider it on realising that it cannot be both a charity which will save her inheritance tax on her generous gesture, and a vehicle for benefiting only members of her family and setting them up in rivalry against each other? Or will her children and grandchildren discover that the Ambridge Conservation Trust is perfectly valid, as in fact it has been drafted with a wider class of potential beneficiaries, with whom they must compete for the prize?
It will take them more than a fondant fancy to get over that revelation, if so.
When I first wrote this blog, I didn’t go into any detail about charities and tax. As far as Peggy’s personal tax liability is concerned, if her gift of £0.5M is a gift to a valid charity (in other words, one recognised as a charity by the Charity Commission and HMRC, both of which require rather more than just calling a trust a “charity” and expressing a wish to save the planet), then it will be completely exempt from inheritance tax (“IHT”). But it still may not have been the most prudent way for her to create a charity. She is unlikely to have had anything near that amount of money readily available, and will have had to sell investments in order to raise the funds. Unless these are investments which are exempt, for example Government stocks, she will have had to pay capital gains tax (“CGT”) on any profit she made on the sale of the investments. It would have been more tax efficient for her to set up her charity with a nominal foundation fund, in order to enjoy the pleasure of bringing it into existence in her lifetime, and then leave £0.5M to it in her will. There is no CGT on death and not only would a gift to a valid charity be exempt from IHT, it would probably be a large enough percentage of her estate (over 10%) to qualify for a reduction of IHT from 40% to 36% on the whole of her chargeable estate (this is a paraphrase of a slightly complicated formula for working out the reduced IHT). So both charity and her family would have benefited more. Peggy is portrayed as the sort of person who would recognise her civic duty to pay tax in accordance with the law, but also as a shrewd woman who takes professional advice, and this would be very obvious advice about perfectly lawful tax planning to give her.
If the Ambridge Conservation Trust isn’t a valid charity, then Peggy has made a disposal of £0.5M to a private non-charitable trust. The treatment of this for IHT depends on the structure of the trust, but it will either be immediately chargeable to IHT at the lifetime rate of 20% (£100,000), or potentially exempt from IHT, provided Peggy lives another 7 years to the age of 102. In either case the tax actually payable will depend on how much of her personal nil-rate band (of at least £325,000 and possibly higher) Peggy has used up with other gifts.
As for the Ambridge Conservation Trust itself, valid charities enjoy a range of fiscal privileges in dealing with their finances, in particular, exemption from income tax, and the benefit of Gift Aid on donations to them. HMRC have some useful published guidance on it all.