You may make regular direct debits to your favourite charity, or you may do one-off sponsorships e.g. a charity walk or parachute jump. You will probably be asked If you want to make the payment under Gift Aid. By doing so, the charity can benefit by more than the amount you pay over. It can reclaim 25% of the amount given from HMRC. So, give £80, and the charity reclaims £20 – giving it £100 in total.However, by making such gifts, you can benefit too by noting these on your tax return if you are a higher rate taxpayer; for a basic rate taxpayer there is no tax effect. So, continuing our example, £80 is given to the charity. If you are a 40% taxpayer, this reduces your tax bill by £20 – so the net cost is £60. Therefore, please remember to make a note of these gifts throughout the year and let us have the details along with your other tax information. We can let you have a form (in Excel or PDF format) to record these gifts if you would like one.A word of warning – if you or your spouse does not pay tax, do not tick the Gift Aid box. You may end up with a personal tax liability!Please get in touch today if you want to find out the best ways of making a Tax efficient charitable donation.
