On Friday, 14th December, the team at Investment Quorum took part in Save the Children’s Christmas Jumper Day 2018. By donning our festive best, we showed our support for Save the Children and their work providing essential food, healthcare, education, and protection to millions of children around the world.
In total, our employees raised £135 which Investment Quorum happily matched, bringing our total team donation to Save the Children’s Christmas Jumper campaign a very festive £270!
Are you making the most of Gift Aid as a UK taxpayer? Gift Aid increases the value of your charity donations by 25% because the charity can reclaim the basic rate of tax on your gift – at no extra cost to you.
As the team completed Gift Aid Declaration (GAD) forms [a statement from you to the charity confirming that you want to donate through Gift Aid and receive tax back on your donation], Save the Children will receive an extra 25p for every £1 donated. That means our team cumulatively donated £337.50 – that’s an extra £67.50 for Save the Children just for filling in a form!
Tax Relief on Gift Aid and Charitable Donations
Taking things a step further, and using the example above, our team could then each claim tax relief up to 25% of their donations. And higher rate taxpayers can claim, from HMRC, the difference between the basic rate of tax claimed by the charity on their donations and the higher rate of tax they pay annually.
It just goes to show, you have to give to receive.
How Your Ugly Jumper Can Benefit Your Tax Return
Let’s look at an example of how Gift Aid and charitable donations can benefit you come tax time.
Edwin donates £100 to a charity – the charity claims Gift Aid (£100 x 25p) to make Edwin’s gross donation £125. Edwin’s gross donation of £125 x basic rate tax of 20% = £100 after tax.
Frances is a 40% taxpayer and donates £1000 to charity. the charity claims Gift Aid (£1,000 x 25p) at the basic rate of tax to make Frances’s gross donation £1,250.
However, unlike Edwin, Frances can claim the difference between her 40% rate of tax and the basic rate of tax of 20% claimed by the charity on her gross donation. Frances claims 20% of £1,250 – a total of £250 – from HMRC. If Frances were an additional rate taxpayer – paying 45% on her income – she would be able to claim the difference between her 45% rate of tax and the basic rate of tax at 20% claimed by the charity on her gross donation.
That would be a 25% difference. In that scenario, Frances could claim 25% of £1250 – a total of £312.50 – from HMRC.
Please note: if you donate to charity through a payroll giving scheme at work, donations are taken out of your gross pay – that’s your pay before tax is deducted. So there’s no tax relief to claim.
In this season of giving, it’s important to not only give but save
By taking advantage of Gift Aid and related tax relief, you’re not only supporting wonderful UK-based charities, but you’re also making your donation go further and helping your bottom line, come tax time. It’s festively win / win!
To learn more about Gift Aid, charitable donations or tax relief, get in touch with a member of our team. This is a perfect time to start thinking about your tax return ahead of 31st January!
This article does not constitute specific advice and investors should bear in mind capital invested is not guaranteed. Investment Quorum is authorised and regulated by the Financial Conduct Authority.
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