Many people, both individuals businesses are really unsure how to make charity donations or what the relevant regulations are with regard to tax benefits and costs. This can put off many potential donors so in order to try and help we have provided some assistance below.

If you are considering leaving money to a local charity in your will we recommend that you speak to your solicitor who will be able to guide you through the process.

Please note: Whilst we have done our best to simplify and condense the information we have collated, we strongly recommend that you visit the following two Government websites; 

www. www.direct.gov.uk

www. www.hmrc.gov.uk

Consulting an accountant is also a good move to ensure that he confirms what you have come to believe.

Give As You Earn

If you are an employee ‘Give as You Earn’ is the most tax effective way to make regular donations. Under the scheme, you make a donation tax-free from your gross salary to any cause of your choice. This means that if you’re a basic-rate taxpayer pledging say £10 a month, it will only cost you £7.80.

Besides donating from your gross pay, there are also other ways of donating money to charity via the Give As You Earn scheme.

You can set up a Charities Aid Foundation account, where you agree to pay a minimum of £10 from your pay each month into your own account. The CAF will give you a special ‘charity chequebook’ and charity card to make tax-free donations whenever you want.

You can use the cheques to make secure donations over the internet and they can also be used for collecting tins in the street.

If you’d like to organise a staff charity fund at work, you can sort this out by joining together with colleagues to set up a joint fund for your Give As You Earn contributions and can then specify us!

If you want to set up a scheme for making large donations, you could put your Give As You Earn contributions towards a CAF Charitable Trust. For most people, the easiest way to join the Give As You Earn scheme is to do so directly through their employer.

Company schemes

Ask your payroll manager if your company has a scheme in place. Even if it hasn’t, they are very easy and inexpensive to set up. Alternatively you can find out whether your employer is registered from the CAF website or call the helpline on 01732 520 055. 

Gift Aid

If you’re self-employed or want to make a one-off donation or react to an appeal, Gift Aid is the best choice. It allows a charity to reclaim the basic-rate tax on donations made by UK taxpayers from the Inland Revenue. In addition, higher rate taxpayers can claim 18% tax relief on the gross amount of the donation, meaning that the donation costs them less.

You can make charitable donations by either or both methods – Gift Aid and Give As You Earn, but you can only claim tax relief once on each type of gift. 

There are no longer any restrictions on charitable giving.