Help a worthy cause to reduce your tax bill

Paul Haywood-Schiefer, Senior Manager says

At a time when charities are struggling due to funding cuts, and taxpayers are struggling due to cost of living, donating to charity and claiming tax relief benefits both you and the charitable cause.

If you make charitable donations through Gift Aid the charity will claim an extra 25p from the Government for every £1 donated – this is on top of your donation so it is a win-win for you and your chosen cause.

Higher and Additional tax rate payers can also benefit from their basic rate tax bands being extended by the gross donation amount, giving them tax relief personally at 20%/25% on the amount donated. However, care must be taken in relation to Gift Aid donations to ensure that you have paid sufficient tax to HMRC. Otherwise, you will need to pay the tax the charities claim via your tax return.

Keep in mind that the charity must be officially recognised by HMRC to claim Gift Aid, so check your chosen cause is registered before donating. If the charity isn’t registered, you will not be able to claim tax back on the donation.

Additionally, you can gift land, property or shares to a charity and reduce the amount of your taxable income by the market value of the assets you have gifted. You also won’t have to pay Capital Gains Tax when gifting these assets.

However, the charity may ask you to sell the gift on their behalf. You can still claim tax relief on this, but you must keep a record to prove to HMRC that the charity asked you to do so, or you may have to pay Capital Gains Tax on the donated proceeds.

Would you like to know more?

If you have any questions about the above or would like to discuss your specific circumstance, please get in touch with your usual Blick Rothenberg contact or Paul Haywood-Schiefer using the form below.