Charitable giving

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Charitable giving

Gifts to charity can take many forms. Perhaps you are already making regular donations to one or more well known charities, coupled with one-off donations in response to natural disasters or televised appeals. In this special supplement to our guide we will focus on some of the ways you can increase the value of your gift to your chosen charities through the various forms of tax relief available.

Gift aid

Donations made under Gift Aid are made net of basic rate tax. This means that for every £1 you donate, the charity can recover 25p from HM Revenue & Customs. Special rules allow a further 3p to be claimed until 2011 as compensation for the reduction in basic rate tax. Furthermore, if you are paying tax at the 40% rate, you can claim further tax relief of 25p. Consequently, at a net cost to you of only 75p, the charity receives £1.28 - or, for a net cost to you of £100, your donation is worth nearly £167 to charity. If you are a 50% taxpayer, the additional tax reclaimed is 37.5p making a donation costing £100, net worth £206 to the charity.

A payment made in the current tax year can, subject to certain deadlines, be treated for tax purposes as if it had been made in 2009/10. This may not be important to many people, but if you paid higher rate tax in 2009/10 and do not expect to do so this year, a claim will allow you to obtain relief at last year's, higher rate.

Payroll giving

You can make regular donations to charity through your payroll, if your employer agrees to operate the scheme.

The scheme operates by deducting an amount from your gross pay equal to the net cost to you of the monthly net donation you want to make - so as an example, if you want to donate £20 per month to a charity, your employer would deduct and pay over the to scheme managers a gross amount of £35.59.

Tax repayments

If, when we prepare your 2010 Tax Return, we find that you have overpaid tax you have the option to ask HM Revenue & Customs to send the repayment on your behalf to a charity of your choice. You also have the option to (a) have the donation treated as made under Gift Aid, and (b) treated as if it had been made in 2009/10.

Gifts of assets

Not all donations need to be money. You can make a gift of assets, such as quoted securities or land and buildings, and the gift can score for a double tax relief. Any gain which would accrue on the gift is exempt from capital gains tax, and you are also entitled to income tax relief at up to 40% on the value of your donation.
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Charitable giving

Gift aid

Payroll giving

Tax repayments

Gifts of assets

Planning guides

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