Charitable Donations

Due to the COVID-19 pandemic, charities have seen a strong growth in demand for their services. But with financial pressures surrounding the donors, charitable donations have unfortunately seen a decline in income.

However, there are benefits of charitable giving that you may not be aware of which we will explore below.

Self Employed

If you have donated to a registered charity during a tax year, you are able to claim gift aid on those donations. Let me explain.

You have donated £1,000 to a registered charity of your choice, the charity is able to claim back the assumed tax that has already been paid, therefore the UK government will repay this element.

£800 would be “grossed up” (100/80), making the actual donation valued at £1000. So the donor has transferred over £800, therefore the registered charity is able to claim back a further £200 from HMRC, brilliant news!

Note – You will need to submit a Gift Aid Declaration form containing the charity’s name and full address.

Company

Gifting from a company the above rules do not apply, and the only benefit is the reduction in your taxable profits. However, companies can gift assets or shares to charities which is a far more complex topic of discussion.

Charities must keep all records of donations received by individuals and companies.