Tax-efficient giving

For UK taxpayers, donating to a charity has tax advantages, particularly through the following methods:

Gift Aid Scheme
Gift Aid allows a charity to reclaim the basic rate tax on donations made by UK taxpayers from HM Revenue & Customs (HRMC). If you pay higher rate tax, you can claim the difference between the higher rate tax (40% and/or 50%) and the basic rate of tax (20%) claimed by the charity.

Example: A gift of £1,000 will be worth £1,250 to County Durham Community Foundation after Gift Aid has been claimed. The cost to a higher rate taxpayer would be £750 (40% rate) or £625 (50%) because the taxpayer would be able to claim back £250 or £375 in their tax return.

In order for us to claim Gift Aid on your donation you must complete and return a Gift Aid Form. The form only needs completing once, no matter how many future Gift Aid claims are made. For your gift to qualify for Gift Aid, you must pay at least as much tax as the amount the charity will reclaim on your gifts in the tax year in which you make them. The tax year runs from 6 April to 5 April the following year.

Donating shares
You can give shares and other UK registered assets to charity, and claim tax relief. By signing the certificates over to a charity, you will not be liable for capital gains tax on the difference between the price you bought them at, and their value when you make your donation. You can claim back other fees, such as costs involved in the transfer or stamp duty. You can also offset the value of the shares against your income tax on your self-assessment tax form.

You can get more information about tax relief when donating to charity on the HM Revenue & Customs website.

You are also welcome to contact us on 0191 378 6340.

Gift of land or buildings
All donations of land or property to charity get full tax relief. For example, if you are a higher rate taxpayer and you give a property worth £100,000 to charity, you can knock £40,000 off your tax bill.

It is worth noting that gifts made to UK charities are completely free of inheritance tax. In addition, donors of assets, land or shares to UK charities are not liable to capital gains tax, even if the asset is worth more when you donate it than when you acquired it.

Legacies
Inheritance Tax is usually paid on an estate when somebody dies. However if you leave a gift to a charity in your will, its value will not be included when valuing your estate (your money, possessions and property) for Inheritance Tax purposes.  Gifts made to a charity in the seven years before your death are exempt from Inheritance Tax.