Tax-Efficient Giving

PCCs like Saint Martin’s are legal charities and, as such, are exempt from income tax. The tax which has been paid on the giving of Church people can be recovered from the Inland Revenue. Church people should understand that this recovery of tax is not "stealing from the Government" but good stewardship of their resources. The government already takes 17.5% of most of our expenditure as we can’t claim VAT back as most business can.

Gift Aid - How does it work?
Gift Aid is surprisingly easy to use. Gift Aid can apply to donations of any amount, large or small, by cash, cheque, postal order, direct debit, standing order, debit or credit card or even in a foreign currency (including the Euro).
If you are a UK taxpayer, all you have to do is give the Church a simple Gift Aid declaration. This might involve completing a short form or just giving basic details to the Church over the phone.
What's more - one single Gift Aid declaration can apply to all past donations you have made (since April 2000) and to all future donations you make.
As a higher rate taxpayer looking to reclaim tax from your donation, all you have to do is remember to include details of your charitable gifts on your tax form. Also, from April 2003, higher rate taxpayers were able to reclaim tax relief from donations paid to charity both during the previous tax year and during the current tax year, that means the relief is paid that much quicker.
Donors who are liable to tax at the basic rate
If a donor wishes to make a regular net contribution of £100 to the Church, this is paid from their gross income of £128.21, on which they have to pay income tax. At a 22% basic rate of tax they pay £28.21 in tax, leaving £100 to be paid to the Church. The Church can then recover tax at the basic rate from the Inland Revenue and the gift is worth more to the Church than one that does not qualify for tax relief.

Donors who are liable to tax at the higher rate
Donors who are liable to tax at the higher rate (40%) will have paid £51.28 in tax. The Church can re-cover tax only at the basic rate but the higher rate relief can be claimed back by the donor - by entering the details on their Self Assessment tax return. A net gift of £100 to the Church then only costs the donor £76.93. The Church will hope that this reclaimed tax will be used to increase the donation at no extra cost.

Do you qualify?
Providing you pay as much tax (income and/or capital gains) as the Church will be entitled to reclaim on your donations in the same financial year, you are entitled to use Gift Aid. For example, if you wish to Gift Aid your charitable donations that total £100 in one year, you will need to have paid at least £28 in to the taxman in respect of that tax year.

Payroll Giving
Payroll Giving is a flexible scheme that enables you to make donations to the Church (or any charity) straight from your gross salary (before tax has been deducted). This means that you get immediate tax relief on the value of your donation. Therefore, for a basic rate taxpayer wanting to give a £10 donation, it will only cost £7.80, or just £6 for higher rate taxpayers.
Furthermore, many employers are encouraging the scheme by matching their employees' donations. You can give regularly in this way by authorising your employer to deduct a monthly amount, but Payroll Giving can also be applied to one-off donations.

How does it work?
Very easily. Your payments are deducted straight from your salary either as a regular monthly payment or as a once off gift. All you need to do is choose how much you want to give and to which charity or charities, tell your payroll department and they will do the rest.
If you are UK taxpayer, paid through PAYE, your company is almost certainly eligible to offer Payroll Giving (they may refer to the scheme using a specific brand name, such as Give As You Earn). Speak to your employer to clarify whether they offer a Payroll Giving scheme, and if so, your employer will be able to arrange for your payroll administrator to deduct charitable donations from your gross pay.

Payroll Giving - What if my company does not offer Payroll Giving?
If your employer, doesn't offer a Payroll Giving scheme, why don't you suggest it to them? It will be easier than they may think, and plenty of advice is available

Share Giving
Giving shares to the Church or charity is not a new idea, but since April 2000, there is a new tax incentive to make Share Giving even more attractive. Individuals who give shares to charity are entitled to claim back full tax relief against the value of those shares. So, a gift of shares worth £1,000 will only cost a higher rate taxpayer £600, or £780 for lower rate taxpayers and furthermore, no capital gains tax will apply.
There are many reasons why giving shares might appeal to you. You might hold windfall shares as a result of a privatisation or demutualisation that are effectively gathering dust, making little difference to you, but they could make a big difference to Saint Martin’s. Or, you may own small parcels of shares, perhaps as a result of an inheritance that you regard as a bit of a nuisance as they generate more paperwork than income. These could be turned into something of real value to others by donating these shares to us.

How does it work?
Tax relief is available to UK taxpayers donating shares and securities listed on the UK Stock Market, the Alternative Investment Market, and recognised stock exchanges overseas. It is also available for units in a UK unit trust, shares in a UK open-ended investment company (OEIC), and some similar foreign investments.

You can claim tax relief equal to the market value of the shares on the day you make the gift, together with any associated costs such as brokers' fees. Furthermore, capital gains tax (CGT) on any increase in the value of the shares since you bought them, will not apply.

Above all please consider moving to standing order for your regular giovingf and Gift Aid it.

If you have any questions please email me on gareth@bowen.to

Blessings,

Gareth