How to keep taxman’s paws off your donation | Personal Finance | Finance
Almost everybody gave something to charity during the last year, but only a quarter of donations eligible for the Gift Aid top-up actually received it, so charities missed out on a potential £560million.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said taxpayers should complete a Gift Aid declaration to give the charity 20 per cent tax relief.
Higher and additional rate taxpayers can then reclaim further tax relief.
“If a higher rate taxpayer gave £400 over the course of a year, the charity could claim another £100 and by completing a tax return, the taxpayer could reclaim £100 themselves. Yet less than one in four does this,” she said.
Payroll schemes are another
Option, allowing you to donate from your pay before income tax is deducted (although after National Insurance).
This offers similar benefits to Gift Aid, but is more straightforward for all.
If selling shares or property would land you with a capital gains tax bill, you can avoid this tax by gifting the assets instead, with Gift Aid on top.
Finally, you can leave money in your will and potentially reduce any inheritance tax (IHT) bill.
“If you donate at least 10 per cent of your estate that is subject to IHT, the tax rate on the remainder falls from 40 to 36 per cent,” Coles added.