1. Gift Aid Donations
Gift Aid allows charities to claim an extra 25p for every £1 donated. This means your donation can be boosted without any extra cost to you. To qualify, you must pay at least as much tax as the charity claims. If you’re a higher-rate taxpayer, you can claim additional tax relief by extending your basic income tax threshold. For instance, if you donate £1,000, the charity gets £1,250, and you can claim back 20% of £1,250. You’ll need to declare this on your self-assessment tax return to receive the tax benefit.
2. Payroll Giving
With Payroll Giving, you can donate directly from your salary before tax is deducted. This offers immediate tax relief at your highest income tax rate. For example, if you’re a higher-rate taxpayer, donating £10 only costs you £6. While charities can’t claim extra funds through Gift Aid, this method is convenient, flexible, and can be set up through your employer. Donations stop when you leave the company or opt to stop them.
3. Charitable Donations in Your Will
Leaving money to charity in your will is exempt from inheritance tax. If you donate at least 10% of your estate, the inheritance tax rate on the remaining estate drops from 40% to 36%. This reduces the tax burden on your estate, allowing you to leave more to both your beneficiaries and charity.
These strategies can help you give back while reducing your tax obligations.
