Tax Efficient Giving

The Gift Aid scheme allows charities to claim basic rate tax of 20% on your donation. For example, if you donated £100 to Gloucestershire Wildlife Trust and we were able to claim Gift Aid, the value of your donation would go up to £125.

Tax relief is also available to UK donors paying higher rates of income tax (40% or 45% for tax year 2019/20). This enables you to reclaim the difference between the basic rate and the highest rate of tax on the gross value of your gift via your self-assessment tax return.

If you do not fill in a self-assessment tax return, you can obtain your
tax relief by calling HMRC on 0300 200 3300 and having your tax code amended. You can then either keep any money reclaimed or donate it back to the charity.

Payroll Giving is a tax efficient donation scheme offered by some employers. It allows charitable donations to be deducted from your monthly salary after the deduction of National Insurance but before the deduction of income tax. These donations are then paid over to a UK charity of your choosing.

When you donate through Payroll Giving, you receive tax relief on your donation immediately. This means that the actual cost to you depends upon the rate at which you are taxed.

To donate £1, a basic rate taxpayer pays 80p. The same donation would cost higher rate taxpayers 60p (or 55p for additional rate taxpayers). The tax you would have paid on your donation is also given to the charity. Note that these amounts will differ in Scotland.

Ordinarily, where there is a gain on a disposal of shares above the annual exemption (currently £12,000 in tax year 2019/20), capital gains tax will be payable on the gain even if they are given away to someone other than a spouse. When donating shares to charity however, no capital gains tax is payable by you provided there is an exchange of letters between yourself
and the charity stating that the shares are to be donated to the charity, and that the charity is happy to accept them in order for the relief to be given.

Proper records must be kept, such as:

• legal documents showing the transfer of the shares to charity
• documents where the charity asks you to sell the shares on
  their behalf.

In addition to the capital gains tax exemption, there is also income tax relief available on the value of the shares.

No inheritance tax is due on legacies left to friends or family below the nil rate band of £325,000. If a property left in a will is a main residence and is bequeathed to a direct descendant, an additional nil rate band of £150,000 applies (accurate as of tax year 2019/20).

Property given to charity does not count towards the total taxable value of the estate. Where at least 10% of the estate is gifted to charity, the rate of inheritance tax falls from 40% to 36%.