Tax-Smart Charitable Giving: Making the Most of Your Year-End Donations

Paul Crichton

Paul Crichton

Tax-Smart Charitable Giving: Making the Most of Your Year-End Donations

Deck the Halls with Acts of Kindness!

As the year winds down and we are all caught up in the festive spirit, it’s not just a time for mince pies and mulled wine, but also a period to reflect and give back. At MMG Chartered Accountants, we’re here to guide you on how to make your charitable giving not only heartwarming but also tax efficient.

Understanding Gift Aid: Your Gateway to Tax-Efficient Giving

Gift Aid is a marvellous scheme that makes your donations go further. When you donate to a charity and declare Gift Aid, the charity can claim an extra 25p for every £1 you give. It doesn’t cost you any extra, but it’s a significant boost for the charity. If you’re a higher rate taxpayer, you can claim the difference between the rate you pay and basic rate on your donation. It’s a win-win!

Payroll Giving: The Gift That Keeps on Giving

Did you know you can donate directly from your salary before tax is deducted? Payroll Giving is a hassle-free way to donate. This means if you pay tax at the higher rate, a £1 donation will only cost you 60p, and the charity still gets the full amount. It’s like Santa’s little helper for your finances!

Donating Shares and Securities: A Wise Move

Donating shares, securities, or even properties can be a smart way to support a cause you care about. Not only does the charity benefit, but you can also claim Income Tax relief on the value of your gift and be exempt from Capital Gains Tax. That’s what we call a savvy Christmas gift.

Inheritance Tax: A Legacy of Giving

Considering leaving a charitable gift in your will? Charitable bequests can reduce the Inheritance Tax rate on the rest of your estate. If you leave at least 10% of your ‘net estate’ to charity, it can lower the Inheritance Tax rate on the remaining estate from 40% to 36%.

Record-Keeping: Your Sleigh of Evidence

Keep a record of all your donations. This includes bank and building society statements, till receipts, and email confirmations. These records are crucial for claiming tax relief on your donations.

Consult the Elves at MMG!

Navigating the festive season of giving can be complex, but don’t worry, our team at MMG Chartered Accountants is here to help. We can provide tailored advice to ensure your charitable giving is as tax efficient as possible.

So, as you revel in the season of goodwill, remember that your acts of kindness can be both generous and tax smart. Here’s to a season of giving that benefits you, your chosen charities, and the wider community.

Happy Holidays from all of us at MMG Chartered Accountants!