If you 'do a lot for charidee', force the tax system to help and you can 'do a liddle more.' This article tells you how to donate up to 60% more to charity than you pay. It's also worth reading Best Cashback Credit Cards (which beat Charity Credit Cards hands down).
Any charity registered with the Charity Commission, or the Office of the Scottish Charity Regulator (small charities and ones based in Northern Ireland register with HM Revenue & Customs instead for charitable tax exemption) can take advantage of schemes allowing them to reclaim your tax.
It's easy to find out who can do this, as it'll have 'registered charity' on its literature, plus organisations like churches, universities, amateur sports clubs and some schools and hospitals automatically have charitable status.
Maximise your giving, Minimise your cost
The simplest way to give is via 'Gift Aid'. This allows charities to claw back your tax from the Inland Revenue on either one-off or regular donations. There's no minimum contribution so even on a pound the tax is reclaimable.
All the charity needs is your name, address and a declaration that you're a UK taxpayer. As this can be verbal it can also be done over the phone.
How does this benefit you and the charity?
Charities reclaim the tax at the basic 20% rate, which due to the way the numbers work means they get 25% more than you donate (so if you give £10, the charity gets £12.50).
Any higher rate (40%) or additional rate (45%) taxpayers are able to reclaim the difference between the basic and higher rates (ie, 20 or 25%) on top of this.
For higher-rate taxpayers, on £10 that's another £2.50 (so £5 in total), and for additional rate taxpayers, it's a further £3.12 (so additional rate taxpayers can give £15.62 from a donation of £10 - 56.2% on top of your original donation).
Higher and additional rate taxpayers can choose whether to claim the extra tax relief on the tax self-assessment form, though there's also an option to donate this extra tax to charity too.
To claim that cash, either declare it on your tax return, or if you don't fill one out, complete a P810 form, available from your local tax office.
'Payroll giving' lets you donate a regular amount directly from your salary, through your employer's payroll. The donation is given before tax (but after National Insurance) is taken off, so the charity automatically gets more, regardless of what level of tax you pay.
The only problem is employers must have a scheme in place: you can't just do it on your own. Ask your human resources department if your firm runs a scheme. If not, it's worth trying to encourage it. This is a simple process run through the automated payroll. The Association of Payroll Giving Organisations (APGO) may be able to help.
Unfortunately if you're self-employed, you can't access payroll giving.
Feed the starving at no cost to you
There is a way to help at no cost. Sites like thehungersite.com work by sponsorship. You go to the site, click the link, and the sponsors pay for food to be donated to someone who is starving. There are other similar sites which donate to various causes. Read Feed The Starving At No Cost To You.
Get a charity chequebook
One final tip. The Charities Aid Foundation run special charity accounts, that let you pay money in directly through either Gift Aid or Payroll giving, where the tax is automatically collected and added to your account.
After this you can use a special chequebook to donate from your account, or make payments online, to a charity of your choice. The big advantage is you can donate tax-efficiently on impulse, even putting the special cheques in collection tins to ensure the charity gains the maximum amount.
Tax breaks can make a real difference to the size of donations. To give £20 using the gift aid scheme a basic rate taxpayer would only need to give £15.60, a higher rate taxpayer just £13.33, and an additional rate taxpayer just £12.80 (assuming the extra tax is donated to charity too). Overall this means to give a charity £240 in a year, it would only cost a higher rate taxpayer £160 and an additional rate taxpayer just £153.60.
The solid chink when you pop a few pennies in the charity bucket still provides well-needed donations. However, if you're planning to do your bit, taking advantage of these tax benefits should turn that solid chink into a solid chunk of cash.
The cost of donating £20 a month to charity
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Donate your old shares
Donating shares to charity is a less obvious way of giving but there are tax benefits here too. Sign over your shares to charity and there's no capital gains tax and you can offset their value (on the day you transfer) against income tax.
There are a number of ways this can be beneficial:
Perhaps you've a shareholding so small it's not worth selling. Or it can be a useful way to give if you've used up your capital gains tax limit (you can make up to £10,900 of one-off gains a year before tax is applicable), you want to offload some shares and the income tax write off means you get a double hit tax benefit.
The transfer form itself works as a record of the transfer and the responsibility of selling the shares moves to the charity, which can wait until it builds up a bigger portfolio to cut down stockbroking costs.