With end of the tax year fast approaching now is a good time to consider tax planning to maximise the use of your individual allowances, reliefs and exemptions for the current tax year. Some of these will be lost if not used before the end of the tax year. Rathebones have prepared some advice below which we thought you may find interesting.
Individuals from all walks of life are uniting against the devastating effects of Covid-19 by giving; giving in the form of time and effort which has been paramount for delivering front line services and giving in the form of financial assistance where they can. With the tax year-end approaching, it is a very effective time to consider one’s financial circumstances, review tax positions and for those with a desire to help, ascertain an amount which they can donate to such charitable causes which align with their personal charitable vision.
The fight, and many are seeing this as a fight, against Covid-19 requires short term aims and long term, strategic planning by all of us; governments, charities and individuals alike. To assist with your considerations, the fiscal system supports charitable giving by providing tax reliefs which maximise the impact of your gift.
When most people think about charitable giving, they are likely to think first of gifting cash. There are, however, many different ways of gifting and what follows is an overview which could help support your philanthropic and tax planning aims:Gifts of cash
Cash donated to recognised charities when accompanied by a Gift Aid declaration enable the charity to reclaim Income Tax at the basic rate of 20% on the value of gift. The amount received is ‘grossed up’ - most simply; a gift of £100 equates to £125 in the charity’s hands including Gift Aid claimable. By signing the declaration, the tax-payer is certifying that sufficient tax has been paid on the income received. If this transpires not to be the case, the individual’s personal Income Tax liability will increase by the franked amount. READ MORE >>Gifts of endowment funds
Gifts of investment assets may be made in-specie. Under current legislation, the deemed disposal is exempt from Capital Gains Tax in the hands of the tax-payer and the value is deductible from the individual’s gross income of that tax year. This is usually claimed by including details of the gift on the self-assessment Tax Return. This can be very useful for investors with large capital gains who are also making gifts from cash. By switching the gift to an investment, cash remains untouched and can be used for any purpose. READ MORE >> Gifts and Inheritance Tax
Gifts to charity are generally exempt from inheritance tax. From 6 April 2012, where 10% or more of any component of an estate has been given to charity, a reduced rate of inheritance tax (36%) will apply to that component. Companies
Companies are also able to obtain corporation tax relief on cash gifts to charity. This is sometimes called Corporate Gift Aid. Gifts of money are paid gross and are deductible from the total profits of the company. Claims are made through the company’s corporation tax return by deduction as a business expense. READ MORE>>
We hope you find the examples helpful in illustrating the effect of charitable giving on your tax affairs but please remember the actual implications of the donation are dependent upon your personal circumstances. We would be delighted to help and answer any questions you have.
If you are interested in finding out more about how charitable giving can be part of your tax planning strategy, please contact Rathbones at firstname.lastname@example.org
If you would like to make a gift to support the work of HCF please contact Helen Gray, Foundation Director
Telephone: 01707 280 339