Giving to Charity

Donations to charity from individuals are tax-free.  You can get tax relief if you donate through Gift Aid or straight from your wages or pension, through Payroll Giving.

Gift Aid is another tax efficient way of making gifts or donations to a charity. When you donate you use money that has already been taxed. If like most taxpayers in the UK, you are a 20% taxpayer, you will have made your donation out of income that has already suffered 20% tax. The charity will take your donation and then reclaim the 20% tax that you originally paid, from HMRC. If you are a 20% taxpayer, there is no further adjustment that needs to be made.

If you pay tax through Pay As You Earn (PAYE), 'payroll giving' is a simple way of making regular gifts to charity. It allows you to authorise your employer or pension payer to make the donation from your pay or pension.

Your employer or pension payer takes off the payments before working out and deducting your tax, so you get relief on your donation immediately at your highest rate of tax. The donations are then passed to the charity on your behalf through HM Revenue & Customs (HMRC) approved charity agencies with which the employer has made an arrangement.

For example, if you pay tax at the basic rate of 20%, and authorise a monthly donation of £10, you save £2 tax (20% of £10). The actual cost of the donation to you is only £8. You will, however, pay National Insurance contributions (NIC) as normal on the £10.

Payroll giving does not affect any other donations you might want to make to charity. You can, for example, make other donations using Gift Aid if you wish.

There are also many ways of investing in good causes and making ethical investments. If you would like to know more please contact us on 020 7337 7763.

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