Taxation of charitable trust giving

FinSol Tax Advisors offer wide range of services in St Albans and throughout UK. Our all Accounts St Albans are offering the perfect financial solution to meet every need of clients.

Gift Aid gives individuals (and companies) tax relief on donations. Individuals make donations out of net (after-tax) income and, if the donor makes a Gift Aid declaration, the charity can claim back the basic-rate tax paid on it; higher- and additional-rate taxpayers can claim back from HMRC (and keep) the difference between basic-rate and higher-rate or additional-rate tax. In 2015–16, charities received £1.26 billion under the Gift Aid scheme on £5.05 billion of donations, while higher- and additional rate taxpayers received £480 million in relief on charitable donations from HMRC.12

Under a payroll giving scheme (Give-As-You-Earn), employees nominate the charities to which they wish to make donations and authorize their employer to deduct a fixed amount from their pay. This requires the employer to contract with an HMRC-approved collection agency, and tax relief is given by deducting donations from pay before calculating tax due. The cost of the payroll giving scheme was estimated to be £40 million in 2015–16.13.

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