Charitable Donations


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How? It is called Gift Aid – in short it is the easiest way to increase the value of your donations at no extra cost to you (only applies to non-corporate UK donations).

Gift Aid allows charities to reclaim basic rate tax on your donations, giving them an extra 25p for every £1.00 you donate at no extra cost to you, for example, on a donation of £10, Gift Aid will add £2.50 increasing the total value of your donation to £12.50.

Donna Wells from Demelza Children’s Hospice tells us;

“The biggest misconception about Gift Aid is that it only applies to monetary donations! You can also gift aid your stock donations to charity shops through the Retail Gift Aid scheme.

Another misconception is that you will have to complete a gift aid form every time you donate and with this it really depends. It depends on how you fill in the Gift aid form, you can choose to gift aid all past, present and future gifts or just the gift you are making at that point.

These two misconceptions affect Gift Aid donations immensely, here at Demelza, around 55% of monetary donations and only 25% of stock donations are Gift Aid donations, which roughly equates to £220,000 that Demelza miss out on each year.”

So is that it?
Well, no… there are some indirect benefits of giving to charities and of course it’s about tax!

Income tax
Higher rate tax payers can reduce their tax bill by 25p for every £1 donation providing the claim is made on their tax return. Additional rate tax payers can reduce theirs by 31.25p! (2013/14 tax rates)

Corporation tax
Companies who make charitable donations can make a claim on their company tax return to deduct the amount of the donation from its taxable profits – so it is treated much like a trading expense.

Inheritance tax (IHT)
A reduced rate of IHT of 36% will apply where 10% or more of the net estate (the gross estate less any exemptions, relief’s and the nil rate band) is left to charity.

So is that it?
No again…because it is not just tax, businesses who make charitable donations also experience other benefits; such as;

  • Public Relations:  the business’s philanthropic activity does not go unnoticed.
  • Reputation: there is no denying the fact that many clients make buying decisions based as much on how they feel about a business as to how they feel about a product or service.
  • Morale: With employees more engaged in their work and more pleased with the culture, their morale will naturally be higher.
  • Teamwork:  giving programs tend to bring people together from senior management right through to trainees and creates a positive attitude in the workplace.
  • Profit: All of the above may eventually lead to greater profit.

Donations are made for different reasons and come in different forms and have many benefits, but if there is one thing to remember, it is to GIFT AID IT, it will make a massive difference and it won’t cost you an extra penny!

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