Tax Efficient Charity Donations

Do you do your bit and give to charity? This blog is to help you make sure you are doing so in a tax efficient way. McDade Roberts are here to help individuals and businesses accumulate, manage and maximise their wealth so always feel free to pick up the phone and have a chat if there is something you do not understand.

What Is Gift Aid?

Gift Aid is the main vehicle for tax efficient giving to charities. It applies to any donation whether large or small, regular or one-off.

Simply by confirming that they are taxpayers, donors can ensure that their chosen charities can reclaim the basic rate of income tax on all their donations, equal to 25% of the amount donated.

As an added boost for donors, higher rate taxpayers can claim for themselves the difference between basic and higher (currently 20%) or additional (currently 25%) rates of tax against their own income tax liabilities, reducing further the net cost of the donation. This relief may be carried back to reduce the tax payable for the previous tax year.

Tax reduction for higher rate taxpayer £250 and for additional rate taxpayer is £312.50.

So a gift worth £1,250 to the charity could cost you as little as £687.50.

What Is Payroll Giving?

This scheme allows you to make gross donations to charity (deducted from your salary before tax is calculated). There is no statutory minimum or maximum limit, although individual schemes may impose a lower monthly donation limit.

What Are Gifts in Kind?

Gifts of certain shares and securities, lands and buildings to a charity attract income tax relief as well as capital gains tax (CGT) relief.

There is a similar corporation tax relief for gifts by companies.

Got any questions about giving to charity? Simply pick up the phone and we will happily help. McDade Roberts clients rely on us to make things straight forward so we may be able to help you too.