Did you know that when you donate to charity it can be tax-free? There are many different ways to donate gifts to charities and still be eligible for tax-relief.  The relief is dependent upon how you choose to donate.

Gift Aid

A donation through Gift Aid is treated as having a basic rate of tax, which allows the charity to reclaim the tax element from HMRC. This means that the amount given to charity is 80% and the charity benefits from the remaining 20%.

This means that for every £1 that is donated through Gift Aid, the charity will actually receive £1.25.

You should be aware that, for the charity to be able to claim tax relief, then the donator must be able to conform that they are a UK taxpayer.

How do I reclaim tax if I have overpaid?

If you as a donator are a higher rate or additional rate taxpayer, then you are able to claim relief for the difference through your self-assessment tax return.

It is worth making sure that you keep a record of your donations so that you can claim additional relief.

Payroll giving

If you want to make charitable donations and get tax relief for your donations, then the payroll giving scheme may be the best option for you.

The donations to charity will be taken out of your salary each month by your employer and they will pay it over to the payroll giving agency who will then pass the donation on to the employees chosen charity.

You should be aware that although a deduction is made from gross pay, there will be no tax paid on it, but you and your employer will still have to pay National Insurance on the amount donated (as will the employer).

Gifts in a will

Where a donation to charity is made in a will, the donation will either reduce the value of the estate before inheritance tax is calculated, or if 10% or more of the estate is left to charity, reduce the rate of inheritance tax by 10% from 40 to 36%. 

Giving land, property or shares to charity

If donations of land, property or shares have been made, then there may be income tax or capital gains tax relief available.

How do I claim for relief?

If you believe that you are eligible to have tax relief by donating land, property or shares to charity then you can reclaim this on your self-assessment tax return. If land, shares or property are sold to a charity for more than the cost, but less than the market values then you will not have to pay capital gains tax.

Further Actions

If you donate to charities, then please make sure that you always check if you are paying tax on the donations, as you are able to reclaim relief.

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