Tax Tip
15 Dec 2009
Charitable Giving
By Janette Burns, Tax Partner, FPM Chartered Accountants
Question.
I would like to make a charitable donation at Christmas. If I make a donation of £1,000 under Gift Aid, is it correct that this will reduce my personal tax liability this year by £250? Will the charity also benefit if I make a donation under this scheme?
Answer.
The government want to encourage more giving to charities and so offer a range of tax incentives to individuals and businesses that make charitable donations. If you are thinking of making a gift of cash you can get tax relief if you give under Gift Aid.
If you pay tax, Gift Aid is a scheme by which you can give a sum of money to charity and the charity can normally reclaim basic rate tax on your gift from HMRC. That increases the value of the gift you make to the charity. For 2009/10 the basic rate of tax is 20%, however, the Finance Act 2008 provides that charities will still be able to recover 22% tax on all gift aid donations made before
There are three main conditions to qualify for gift aid tax relief. You must make a declaration to the charity that you want your gift to be treated as a Gift Aid donation, pay at least as much tax as the charities will reclaim on your gifts in the tax year in which you make them (tax credits on dividend income will count towards the tax paid) and not receive excessive benefits in return for your gift.
The advice in this column is specific to the facts surrounding the question posed. Neither the Democrat nor the contributors accept any liability for any direct or indirect loss arising from any reliance placed on replies.
