TAX RELIEF ON YOUR DONATIONS TO CHARITY

Donations by individuals, sole traders and partnerships to charity are tax free. This is called tax relief.   The tax goes to you or the charity. How this works depends on whether you donate through Gift Aid, a Payroll Giving scheme, in your will or by donating land, property or shares.

Gift Aid

Your donations will qualify as long as they’re not more than 4 times what you have paid in tax in that tax year (6 April to 5 April). The tax could have been paid on income or capital gains.  You must tell the charities you support if you stop paying enough tax.

If you pay tax at a rate of 40% or above, you can claim the difference between the higher and basic rate on your donation. You can do this through your Self Assessment tax return or by asking HM Revenue and Customs (HMRC) to amend your tax code

Payroll Giving

If your employer, company or personal pension provider runs a Payroll Giving scheme, you can donate straight from your wages or pension. This happens before tax is deducted from your income.

Land, property or shares

You don’t have to pay tax on land, property or shares you donate to charity. This includes selling them for less than their market value. You get tax relief on both Income Tax and Capital Gains Tax

In your will

Your will says what will happen to your money, property and possessions after you die.  Your donation will be taken off the value of your estate before Inheritance Tax is calculated or reduce your Inheritance Tax rate, if more than 10% of your estate is left to charity.  You can donate a fixed amount, an item or what’s left after other gifts have been given out.

Keeping Records

To be able to claim the tax back, you will need to keep records of your donations.

For gift aid donations you must keep records if you:

• pay higher rate tax
• claim tax credits
• get a higher Personal Allowance because of your age
• get Married Couple’s Allowance

If you’re claiming tax back through your Self Assessment tax return or by asking HM Revenue & Customs (HMRC) to amend your tax code keep records showing the date, the amount and which charities you’ve donated to.

Land, buildings and shares

For donations of land, property or shares you need to keep legal documents showing the sale or transfer to charity and any documents from a charity asking you to sell land or shares on its behalf.  You normally have to keep your records for at least 22 months from the end of the tax year they’re for.

There are different guidelines for limited companies

Your limited company pays less Corporation Tax when it gives the following to charity:

• money
• equipment or trading stock (items it makes or sells)
• land, property or shares in another company (shares in your own company don’t qualify)
• employees (on secondment)
• sponsorship payments

You can claim tax relief by deducting the value of your donations from your total business profits before you pay tax.

For more information or if you have any queries, please call us on 0113 864486.

Source and more information at https://www.gov.uk/donating-to-charity/overview