Gifts to Charity

If at all possible, taxpayers should “Gift Aid” any charitable contributions to provide the organisation with an additional advantage. On the grossed-up amount donated, higher-rate taxpayers receive further tax reduction.

For example, if an individual donates £20 in cash to charity, the organisation can reclaim an additional £5 from HMRC, resulting in a gross contribution of £25. If the donor is a 40% higher rate taxpayer, he or she can claim an additional £5 tax relief through self-assessment, bringing the net cost of the donation down to £15.

Note that the donor must declare that they are a UK taxpayer, and those who have not paid enough UK tax to cover the Gift Aid amount will be taxed on the difference.

Keep in mind that Gift Aid does not only apply to monetary contributions. Many charity stores will now sell donated products on your behalf and be able to claim Gift Aid on the revenues. Gifting quoted securities, land, and buildings to charity and claiming Gift Aid on the market value of those assets is also conceivable.


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