Of all the taxation reforms introduced by Gordon Brown in the UK since Labour came to office in 1997 perhaps the most radical has been the changes to assist charities.
Essentially it has never been more tax-efficient to donate to charity, through payroll giving, gift aid or even relief on gifts of stocks and shares.
The biggest changes became effective as of April 2000 as part of the government initiative of 'Getting Britain Giving'. In summary the main changes were:
Gift Aid
On completing a gift aid declaration the charity receives a rebate from the Inland Revenue equal to the tax payable (at the basic rate of 22%) on the grossed-up amount of the gift, this makes it equivalent to 28.2% of the cash gift. This scheme is only to UK taxpayers, there is no minimum giving level and in 2000 the scheme was extended to:
- Crown servants and members of the armed forces serving overseas
- Donations by non-resident individuals made out of income or gains brought into charge to United Kingdom tax will come within the Gift Aid scheme
- Donations by non-resident companies will also come within the scheme
Higher rate taxpayers can arrange for their tax office to give the benefit of extra tax relief if the gift amount is entered on the tax return.
Shares
Capital gains relief is applicable to the donation of shares to a charity. In 2000 the following categories were added to the list of exempted securities:
- Units in authorised unit trusts
- Shares in open-ended investment companies
- Holdings in foreign collective investment schemes
- Unlisted shares and securities dealt in on a recognised stock exchange, such as shares traded on the Alternative Investment Market.
At the launch of 'Getting Britain Giving' charity representatives were pleased with the new opportunities of tax efficient donation.
Stuart Etherington, head of National Council for Voluntary Organisations, said:
"This is an excellent boost and will be a major step forward in helping spread the word that tax effective giving really works."
For further information on tax efficient donations please contact Trinity
Trustee (and Ariadne investor) Susan Dark at sudark@aol.com
or write to Susan c/o Trinity Hospice:
Trinity Hospice
30 Clapham Common North Side
London SW4 0RN
Tel: 020 7787 1000
Fax: 020 7787 1020
Or for comprehensive information see the Inland Revenue's website: www.inlandrevenue.gov.uk/charities
