Many of our clients are involved in charitable
giving. Both the charity benefits and you
benefit as tax relief is available to individuals
to encourage this type of giving.
Tax reasons for giving
If you are a tax-payer, the Government
will give you tax relief on the amount you give
to charity if your payment is made by Gift Aid. Gift
Aid now incorporates the old style “deed
of covenant” that used to be necessary for
tax relief on regular giving.
Gift Aid
- This can
either be a single “one-off” payment,
or a regular payment (weekly,
monthly, quarterly or annually).
- The donor makes a declaration
that the payment is to be made under the Gift
Aid scheme.
- The payment made is treated
as having basic rate tax paid
on it.
- The Charity then makes a claim
to the Inland Revenue to recover
the basic rate tax you paid.
- Higher rate tax payers
in particular need to keep a record of their
payments, to claim higher rate
tax relief, reducing their own
tax liability. In fact
everyone using gift aid should
keep appropriate records for
tax purposes.
Charitable Agencies
Some agencies have been established to encourage
and support charitable giving. The main government
sponsored scheme is the Charities Aid Foundation. There
is also an alternative Christian organisation called
Stewardship Services. These agencies deal
with the Gift Aid tax reclaims on your behalf passing
the gross charitable gifts to a selection of charities
or directly to the charity of your choice.
Both organisations provide vouchers for you to gift to the
charity and produce monthly statements to help
you keep an account of your monthly giving and
at the end of the tax year produce a statement
providing a summary of your charitable giving for
that tax year, which is useful for tax returns.
Levels and bases of any reliefs from taxation
are subject to change and their value depends on
the individual circumstances of the investor.
The Financial Services Authority does not regulate
Taxation and Trusts advice.
More information on the charitable
agencies can be obtained from their web sites by
clicking on the links below.
www.cafonline.org
www.stewardship.org.uk
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