Money
Tax and benefits
How to be tax-savvy and help charity
More than £8 billion was given to charitable causes by UK adults during the last tax year, but that figure could have been bolstered by 10 per cent if donors were more tax aware. How do you make sure that your donation to your chosen charity makes the biggest impact, asks Teena Lyons
Step one: Identify yourself. To make a one-off donation more cost-effective use Gift Aid, a tax relief introduced in the year 2000 that enables charities to reclaim 28 pence in every pound from the Inland Revenue. All the charity needs to do this is your name, address and a confirmation that you are a UK taxpayer. When making a donation over the phone, you can make this declaration orally. It only takes a few minutes and turns out to be better all round than putting money in a tin where there is no way a donor can be identified and that extra cash can not be reclaimed.
Step two: Sign-up to pay-up. Regular donations are crucial to charities and provide the backbone to many of their activities and future plans. Payroll giving is the easiest way to do this is via your employer's pay scheme. The donation is given before any tax is taken off, which means the charity automatically receives both a basic rate taxpayer's and all of a higher rate taxpayer's cash. The only catch is employers must have a scheme in place. If they don't, why not try to encourage it? Information on national payroll schemes can be found at www.cafonline.org and www.charitiestrust.org
Step three - Give an account. The Charity Aid Foundation runs a dedicated charity account. You need to commit to a single payment of £100, or a minimum of £10 a month and once you've signed up you pay money in directly through either Gift Aid or payroll giving. Tax is automatically deducted and added to your account. After that you can use a special card or cheque book to donate from the account whenever you feel like it. You can even put one of the cheques into a collection tin to the maximum effect.
Step four: Skip tax. Tax is not payable on legacies made to charities, regardless of the sum, or on shares donated to good causes. If you leave cash in your will, experts recommend you clearly state the name, registered charity number and address of the charity. On shares, if you sign them over to a charity, there is no capital gains tax and you can offset their value against income tax. As well as doing a good deed, it is a useful way of offloading a shareholding which maybe too small to be worth selling.
