Tax Advice: Gifts to charity

Those thinking about making gifts at Christmas should take advantage of the various inheritance tax (IHT) exemptions and reliefs available. There are also certain gifts which have capital gains tax (CGT) implications too.

In this series of articles, brought to you by Beavis Morgan, we look at the various options available to you.

Tax benefits when gifting to charity

 Where possible higher rate taxpayers should “Gift Aid” any payments to charity to provide additional benefit to the charity and for the individual to obtain additional tax relief on the payment.

For example, where an individual makes a £20 cash donation to charity the charity is able to reclaim a further £5 from HMRC making a gross gift of £25. Where the individual is a 40 per cent higher rate taxpayer he or she is able to claim a further £5 tax relief under self-assessment, reducing their net cost to £15.

Note that the donor is required to make a declaration that they are a UK taxpayer and those that have not suffered sufficient UK tax to support the Gift Aid amount will be taxed on the shortfall.

Remember that Gift Aid does not just apply to gifts of cash. Many charity shops will now sell your donated items on your behalf and are able to treat the sale proceeds as Gift Aided donations. It is also possible to gift quoted securities and land and buildings to charity and claim Gift Aid on the market value of those assets.

Please feel free to contact us if you are considering taking advantage of this exemption. Our tax specialists at Beavis Morgan are available to assist you in keeping the necessary records to satisfy HM Revenue & Customs.

For more information, please contact your usual Beavis Morgan Partner.

Other articles in the series:
The IHT annual exemption – use it or lose it!

Gifts out of income are not taken into account for IHT

Certain gifts can have Capital Gains Tax consequences

Gifts of up to £50 to employees