Reducing your tax bill through charitable giving & key November tax dates

Giving to charity attracts a series of generous tax breaks that you can take advantage of. These breaks can positively affect inheritance tax, income tax as well as capital gains.

There are many amazing and deserving charities in Sussex and the South East which run purely on the goodwill of their volunteers and donations from the public.  You can help those charities by giving, while at the same time getting tax relief on the donation.

Gift Aid

Donating through Gift Aid means charities and community amateur sports clubs can claim an extra 25p for every £1 you give. It won’t cost you any extra. You benefit from a reduction in your tax bill if you are a 40% or 45% taxpayer – all you have to do is keep a record of your donations and then make the appropriate claim on your tax return.

For a 40% taxpayer, the relief is the same as the charity top-up – 25% of the sum given (so a cash donation of £100 results in a £25 reduction in your tax liability).

Gift Aid is typically associated with donations of money, these days often made online. However, some charity shops now offer arrangements where you can gift the proceeds of selling your unwanted items and the relief applies in the same way. Admission fees for zoos and heritage attractions often also qualify.

Donating straight from your wages or pension

If your employer, company or personal pension provider runs a Payroll Giving scheme, you can donate straight from your wages or pension. This happens before tax is deducted from your income.

You can’t donate to a community amateur sports club (CASC) through Payroll Giving and the tax relief you get depends on the rate of tax that you pay.

To donate £1, you pay:

• 80p if you’re a lower rate taxpayer
• 60p if you’re a higher rate taxpayer
• 55p if you’re an additional rate taxpayer

Donating land, property or shares

You don’t have to pay tax on the disposal of land, property or shares when you donate them to a charity. This includes selling them for less than their market value.

You get tax relief on both:

• Income tax
• Capital gains tax

You can’t claim income tax relief on donations to community amateur sports clubs (CASCs).

You must keep records of the donation to show that you’ve made the gift or sale and that the charity has accepted it.

Leaving gifts to charity in your will

You can donate your money, property and possessions to charitable organisations.

Your donation will either:

• Be taken from the value of your estate before inheritance tax is calculated
• Reduce your inheritance tax rate, if more than 10% of your estate is left to charity

You can donate:

• A fixed amount
• An item
• What’s left after other gifts have been given out

If you are interested in learning more about how to reduce your tax bill through charitable giving in Sussex & the South East, get in touch with Robin Stevenson our tax partner who can offer you some guidance on the best strategy to take

Robin Stevenson

Email: robins@swindellsaccounting.co.uk

Tel: 01825 763 366

Key Tax dates for November 2017