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Giving to charity

As experienced accountants, Page Ivy can advise on a range of issues when it comes to giving to charity. We can help individuals and businesses in Chesterfield to make use of the available tax reliefs and to maximise the value of their donations.

We consider the options available for individuals considering making tax-effective gifts to charity. Individuals can get tax relief on gifts to UK charities:

  • under Gift Aid
  • through a Payroll Giving scheme
  • by making a gift of certain shares or land.

Location of the charity

Charitable tax reliefs are available to gifts to UK charities and Community Amateur Sports Clubs (CASCs).

UK donors are able to receive the same tax reliefs in respect of these donations and legacies that they enjoy for donations to UK charities.

The qualifying overseas charities benefit from the same UK tax exemptions and reliefs as UK charities.

Gift Aid

Gift Aid is the main vehicle for tax efficient giving to charities. It can apply to any donation whether large or small, regular or one-off.

Making a payment under Gift Aid allows donors to ensure that their chosen charities can reclaim the basic rate of income tax on all their donations, equal to 25% of the amount donated.

As an added boost for donors, higher rate taxpayers can claim for themselves the difference between basic and higher (currently 20%) or additional (currently 25%) rates of tax against their own income tax liabilities, reducing further the net cost of the donation. This relief may be used to reduce the tax payable for the previous tax year if the donation has been made before the tax return for the previous year has been submitted to HMRC.

Example

Gift to charity £1,000
Charity reclaims tax £250
Total value of gift £1,250

Tax reduction for higher rate taxpayer £250 and for additional rate taxpayer is £312.50.

So, a gift worth £1,250 to the charity could cost as little as £687.50.

How does a gift qualify for Gift Aid?

There are three main conditions. The taxpayer must:

  • make a declaration to the charity that the gift is to be treated as a Gift Aid donation
  • pay at least as much tax as the charities will reclaim on the gifts in the tax year in which the gifts are made
  • not receive excessive benefits in return for the gift.

Making a declaration

The declaration is the charity’s authority to reclaim tax from HMRC on the gift.

The declaration can be in writing or orally but, usually, the charity will provide a written declaration form.

Individuals do not have to make a declaration with every gift. In order to make a Gift Aid donation the individual needs to make a Gift Aid declaration. The charity will normally ask the individual to complete a simple form - one form can cover every gift made to the same charity or CASC for whatever period, and can cover gifts the individual has already made (backdating the claim for up to four years) and/or gifts made in the future.

Gift Aid donor benefit rules

The donor benefit rules that apply to charities that claim Gift aid are determined by two percentage thresholds:

  • the benefit threshold for the first £100 of the donation is 25% of the amount of the donation
  • for larger donations, charities can offer an additional benefit to donors up to 5% of the amount of the donation that exceeds £100.

There is an overriding limit on the value of benefits received by a donor in a tax year as a consequence of donations to a charity, which is £2,500.

Taxpayers can pay membership subscriptions to a charity through Gift Aid, provided any membership benefits received do not exceed certain limits. However, disregard free or reduced entry to view any property preserved, maintained, kept or created by a charity in relation to their charitable work.

Gift Aid Small Donations Scheme

Charities and Community Amateur Sports Clubs (CASCs) may be able to claim top‑up payments from HMRC on small cash donations under the Gift Aid Small Donations Scheme (GASDS). For the purposes of the scheme, a small donation is defined as £30 or less.

The GASDS may allow the charity to recover tax although no Gift Aid declaration has been made. Unlike Gift Aid, the scheme applies regardless of whether the donor is a UK taxpayer, although the donation must be collected in the UK. However, the scheme only applies to donations made in cash and contactless donations made by card, making it particularly pertinent to those who operate collection boxes or bucket collections. Cheques and bank transfers are not eligible under the GASDS.

To qualify for the GASDS, the organisation must:

  • be a charitable trust or a charitable company, recognised by HMRC as a charity for tax purposes or a CASC
  • make claims under Gift Aid
  • not have incurred a penalty on a Gift Aid or GASDS claim made in the current or previous tax year.

Qualifying organisations can claim a top-up payment worth up to £2,000 on the lower of two amounts:

  • ten times the amount on which Gift Aid is claimed in respect of qualifying donations made to the charity in the tax year concerned; and
  • £8,000.

Higher and additional rate taxpayers will not be able to claim tax relief on their donations.

Charities Online

Charities Online allows Gift Aid repayments to be claimed online. The system is designed to speed up and simplify the process of making a repayment claim, saving valuable time for charities and CASCs.

HMRC aims to repay amounts claimed via Charities Online within 20 working days. There are built‑in checks to detect errors in the process before the form is sent.

There are many complex accounting and reporting requirements governing charities and not‑for‑profit organisations. Whatever the nature of your organisation, we can help you to meet its objectives. Please contact us for more information.

CAF Charity Account

This is a very flexible scheme organised by CAF (Charities Aid Foundation). An account can be opened with as little as £10 a month by direct debit, or with a single payment of £100.

The ‘account’ is in effect a ‘charity cheque book and debit card’ and can be used to make donations easily – spontaneously or regularly – by phone, by post or online – to chosen charities.

Tax is recovered at the basic rate and added to the account. As with Gift Aid, higher and additional rate taxpayers can reclaim the difference between the basic and higher or additional rates of tax.

Payroll Giving

This scheme allows an individual to make gross donations to charity (deducted from salary before tax is calculated). There is no statutory minimum or maximum limit, although individual schemes may impose a lower monthly donation limit.

Example

Gift from gross pay £50
Charity receives £50
   
Actual cost to basic rate taxpayer £40
Actual cost to higher rate taxpayer £30
Actual cost to additional rate taxpayer £27.50

Gifts in kind

Gifts of certain shares and securities, land and buildings to a charity attract income tax relief as well as capital gains tax (CGT) relief.

Example

Gift of shares valued at   £1,000
Income tax saving basic rate taxpayer £200
  higher rate taxpayer £400
  additional rate taxpayer £450
Potential CGT saving basic rate taxpayer £100
  higher or additional rate taxpayer £200

There is a similar corporation tax relief for gifts by companies.

If you are in the Chesterfield area and would like advice on Gift Aid and payroll giving or any other tax issues relating to charitable giving, contact Page Ivy today.

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After completing her A-Levels in 2017, Rebecca started her career in accounting by joining the Page Ivy team. Since then she has completed levels 2 and 3 of the AAT qualification and is currently studying towards level 4.

In the office, Rebecca works with our clients to assist them in preparing their VAT returns, assists with Xero Cloud-based bookkeeping and Accounting and is also trained in all matters of payroll.

In her spare time, Rebecca likes to, spend time with her friends and family, train dogs and more recently, has started to learn Spanish.

Since school Charlie has always had an interest in accountancy and followed up on his career aspirations by joining Page Ivy in 2017.

After three years of studying, Charlie is nearing completion of his AAT level 4 qualification and is looking to start his ACCA training imminently.

Charlie deals with the preparation of Limited Company, Sole trader and Partnership accounts along with preparing VAT and MGD returns.

In his spare time, Charlie enjoys watching football and spending time with his partner, friends, and family.

Danielle joined the Page Ivy team back in 2013 as an AAT Trainee, now qualified she is responsible for managing our Payroll  Bureau.

Her role includes processing weekly, bi-weekly, and monthly payroll runs, corresponding with HMRC on behalf of our clients,  preparing and submitting CIS 300 returns, assisting clients with all areas of payroll, HR, and Administration.

In her spare time, Danielle enjoys climbing, spending time with family and friends, and going on long country walks with her partner and dog.

Declan is the newest member of the Page Ivy team, starting with us in 2020.

Declan is currently studying towards level 2 of his AAT Apprenticeship and in the office, is getting to grips with data entry and analysis.

In his spare time, Declan enjoys country walking with his family and dog, sports events and more recently, learning to play the piano!

Megan joined our team in 2014 and has been ensuring that the Page Ivy office runs smoothly ever since.

Her role includes managing the team and their diaries,  handling client queries, and assisting with Administration.

Megan is a Xero certified Payroll advisor, meaning that when Danielle is on leave, Megan is on hand to run our payroll department.

Megan has two children, Isabella and Felicity, who like to keep her busy! In her spare time, she likes to keep fit, spend time with her family and online shop!

Abby started her career in accounting in 2009, working for a small practice in Chesterfield, alongside studying for her AAT qualification.

After three short years, in 2012 the opportunity arose to become Director of Page Ivy Accountants and she hasn't looked back!

Building long-lasting client relationships are of utmost importance to Abby, she has a passion for providing a high level of customer service and ensuring that our clients feel valued.

Abby is responsible for overseeing the preparation of VAT returns and MGD return prepared by the Page Ivy team; along with providing personal tax advice to a wide range of clients.

 

In her spare time, Abby enjoys, traveling, reading, and going to the gym.

Edward joined the team as a school leaver in 2012.  From here he went on to study Business Administration, AAT, and finally progressed on to complete his  ACCA qualification 2019.

Edward is a knowledgable, pro-active Senior accountant, who prides himself on providing high quality, in-depth, technical advice in a manner that is easily understood by his clients.

He is responsible for the preparation of Sole trader, Partnerships, and Limited Company accounts. As well as monthly and quarterly management accounts and conducting business reviews.

In his spare time, Edward likes to spend time with his friends and family,  spending time in his local pub and watching Derby FC collect 3 points.

 

Gareth started his career in accountancy in 2002. Since then he has worked in both small and medium-sized accountancy practices, working with a variety of clients from small businesses to advising quoted companies on Corporate Tax compliance and specialist claims, such as for Research and Development allowances. He places high importance on technical expertise, believing this to be essential to ensure clients can be safe in the knowledge they are fully compliant with HMRC’s requirements while minimising their tax liabilities. This is reflected in him being a fully qualified member of the Chartered Institute of Taxation, and a fellow of the Institute of Chartered Accounts in England and Wales.

He joined Page Ivy in 2012, since then he has taken responsibility for overseeing the preparation of clients Sole Trader, Partnership and Limited company accounts, as well as clients personal Self Assessment Tax Returns.

Alongside Abby he hopes to continue to develop both the technical expertise within the firm, and see the business continue to grow from strength to strength.

Outside of work Gareth has served as deputy leader of the town council, enjoys eating out, and fishing.

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