Tax benefits of giving back

Giving efficiently - tax relief when giving to charity

As we come to the end of another financial year, we are reminding individuals and businesses about how to make the most of your giving...

Gift Aid

Gift Aid enables charities to claim additional money on your donation without it costing you a penny more. We can claim 25p for every £1 donated, as long as you can confirm we can claim Gift Aid.

To make a Gift Aid donation, you must be a UK taxpayer. Your donation is treated as if basic rate income tax had been deducted: charities can therefore reclaim that tax from HM Revenue & Customs (HMRC). 

For example, on a donation of £10,000, we can claim £2,500 in Gift Aid, meaning your gift total will be £12,500.

If you pay tax at the higher rate, you can claim back the difference between the higher rates of tax (40% or 45%) and the basic rate (20%) on the total value of the donation.

For example:

• If you pay the 40% rate, a donation of £10,000 allows you to recover £2,500, so the donation costs you only £7,500 net, but Kent Community Foundation, with £2,500 gift aid, receives £12,500.
• If you pay the 45% rate, a donation of £10,000 allows you to recover £3,125, so the donation costs you only £6,875 net, but Kent Community Foundation, with £2,500 gift aid, receives £12,500.

Please make sure before making a gift aid payment in any year that you have sufficient taxable income to cover the donation. If you do not then HMRC may seek to recover the tax from you. If in doubt please speak to a professional adviser.

Corporation Tax

Donations made by local businesses may also be offset against Corporation Tax by deducting the value of your donations from the total business profits before paying tax.

With the voluntary sector under ever increasing pressure, we would like to encourage all advisers, individuals, and businesses to consider charitable giving as part of their end of year financial planning.

For more detailed information please see gov.uk/donating-to-charity or to discuss making a donation to Kent Community Foundation, please contact development@kentcf.org.uk or by calling 01303 817 505.

Are you a financial adviser looking to speak with your clients about philanthropy and giving to charity?

We are here to help. As experts on local philanthropy in Kent and Medway, we can support you and provide tools and information needed on giving to local charitable causes. Take a look at our Professional Advisers page and our toolkit. Get in touch with Rachel for more information rachel@kentcf.org.uk