How much do we give to charity?
Tomorrow is the London Marathon. The event, right, has raised £450m for charities since it began in 1981. According to the Charities Aid Foundation, we gave £9.9bn to good causes last year, an average of £31 per person.
What is Gift Aid?
Donations and sponsorship are worth even more to charities because they are able to reclaim the tax we have already paid on that money through a scheme called Gift Aid. for example, a £10 donation would be worth £12.50 with Gift Aid and until 5 April 2011 an extra 3p will be added to every £1 donated. Higher-rate taxpayers can declare charitable donations on their self-assessment forms, which enables the charities to claim an extra 20 per cent in Gift Aid.
Is it a tax-efficient way of giving?
It is a simple option and has proven to be tax-efficient. You can also claim income tax relief for gifts and assets you have donated to charity. However, the amount you can give via Gift Aid may be reduced because of this. You may also not be able to use Gift Aid at all if your tax is refunded for that year, so sometimes it's more efficient if you sell an asset and make a Gift Aid donation from the proceeds, rather than donating the asset itself to charity.
Can I donate through my salary?
Yes, as long as your employer operates a Payroll Giving scheme. Your donation is deducted from your pay before tax is worked out, so you pay tax only on the balance, so you get tax relief immediately at the highest tax rate.
Are there any other ways I can donate?
Many charities allow you to donate a set amount per month via direct debit from your bank account. There are also charity credit cards, such as the one from Virgin Money with which any purchase generates a 0.8 per cent donation to a charity of your choice. If you opt into Gift Aid, this donation rises to 1 per cent.