Tax Relief on Charitable Donations

For many people, wealth isn’t the finish line. It’s a way to do good and support the causes that matter. With the right approach, your giving can go further, and you can claim tax relief on charitable donations while you do it.

Jill

Jill Walker

Private Client Partner

Contact Jill Meet the team

Who we can help

  • ENTREPRENEURS
  • HIGH NET WORTH INDIVIDUALS
  • INTERNATIONAL PRIVATE CLIENTS

How we can help

  • GIFT AID
  • INHERITANCE TAX PLANNING & ADVICE
  • FOUNDATION & TRUST PLANNING & ADVICE
  • NON-CASH DONATIONS

Tax Relief on Charitable Donations

Maximise Tax Relief on Charitable Donations

There’s an increasing emphasis on ‘wealth for good’ amongst those fortunate enough to have the means and the desire to support good causes. You may already know which charity or organisation you want to benefit or perhaps you need help deciding, in which case we can suggest how to choose based on an organisation’s Ethical, Social and Governance (ESG) criteria or through other research. 

Equally important, we’ll also advise on tax relief on charitable donations, both to ensure your chosen charity can realise the maximum benefits from your generosity and so you can also benefit from the tax advantages designed to encourage giving. These relate to tax relief you can claim during your lifetime and by making charitable legacy provisions in your Will to mitigating Inheritance Tax for your family. 

GIFT AID FOR HIGHER RATE TAXPAYERS

Gift Aid is one of the most frequently used and easily understood ways to benefit UK registered charities and community amateur sports clubs (CASCs), which can claim a further £25p from the government for each £1 donation they receive.  

As a higher rate tax payer, you’ll also benefit. Your basic and higher rate tax bands are increased by the same amount as your donation, so more of your income is taxed at the lower rate. If you earn over £100,000 p.a., your tax-free personal allowance reduces by £1 for every £2 you earn above £100,000, but making Gift Aid donations extend it by £1 for every £2 of gross donation, again providing a tax saving.  

We can also advise on the optimum Income Tax reliefs available on lifetime charitable donations via the Gift Aid scheme, ensuring maximum benefit to both you and your chosen charity.  

Ask for advice about gift aid

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REDUCING YOUR INHERITANCE TAX

As part of our Inheritance Tax (IHT) planning service, we’ll work alongside your legal advisor to provide guidance on how best to draft your Will to leave a legacy to charity, giving you assurance that your nominated charity will benefit at the same time as mitigating your family’s exposure to tax on your death.  

The amount of your donation will be deducted from your estate before IHT is calculated, reducing the amount of IHT payable. If your legacy leaves at least 10% of your net estate to charity, this lowers the IHT rate and further reduces the tax bill. However, it’s worth bearing in mind that your donation will also reduce the remaining value of your estate, so whilst less money will be taken by HMRC, there will be less to distribute to your beneficiaries.  

Tell us about your inheritance tax

SET UP YOUR OWN CHARITABLE FOUNDATION OR TRUST

We can also advise you on setting up a Charitable Foundation or Trust for long-term giving and smart tax planning. This approach helps you shape your own philanthropic goals, with full control over the charity’s constitution and how your funds are used. It can also support your succession plans by helping your children understand how charitable funds are managed. And throughout the process, we’ll ensure you understand how Tax Relief on Charitable Donations can support your wider plans.

The structure you choose will depend on what you want to achieve, along with practical considerations like employing people, holding property, or entering into contracts. Your options include:

  • Charitable Trust
  • Charitable company limited by guarantee
  • Charitable Incorporated Organisation

Together, we’ll explore your aims, how you’ll fund your charity, and what it will cost to run, so we can find the right fit for you.

Setting up a foundation or trust? Contact us.

NON-CASH DONATIONS

If you make non-cash donations to charity, you can reduce your taxable income by the value of the donation.

Non-cash donations include assets such as:

  • Land
  • Property
  • Fund investments
  • Listed shares

In addition, in most cases you won’t pay any Capital Gains Tax (CGT) on gains you’ve made on those assets. We can give you further advice on this aspect of charitable giving.

See how we can help with non-cash donations

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