Tax dodge of the week: Give to charity
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If you are giving to charity this Christmas, make sure you claim Gift Aid to take advantage of a generous tax break, says David Prosser in The Independent.
As long as you’re a taxpayer and can declare yourself to be such “verbally or in writing”, you can claim Gift Aid on any donation you make to a registered charity. A change to the rules last month means that charities can now accept a donor’s agreement for them to claim Gift Aid over the phone rather than having to write to each donor confirming that Gift Aid has been claimed.
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By claiming Gift Aid, the charity gets basic-rate tax relief on your gift. That means that every £1 you give is worth £1.28 to the charity. Higher-rate taxpayers are allowed to claim the difference between the basic and higher rates of income tax on their tax returns, which is currently 18%. So if you gave away £400 one year and claimed Gift Aid, the charity would receive an extra £112.82 (calculate this by multiplying the sum by 22/78) and you would claim back £92.30 (18% of £512.82) on your self-assessment form (see www.hmrc.gov.uk).
You may be able to persuade your employer to set up a payroll-giving scheme. In this way, donations are made from your salary to charity tax-free, so a monthly pledge of £10 would mean £7.80 off a basic-rate taxpayer’s pay packet. The scheme is administered by the Charities Aid Foundation (www.cafonline.org).
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