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Being charitable doesn’t have to cost a lot

Paystream News

David McManus

Wednesday 21st Feb, 2018

A cash gift of £80 will generate a tax refund of £20 for the charity so that it ends up with £100. The donor will get higher rate tax relief of £20 so that the net cost of the gift is only £60. Where the 45% additional rate of tax applies, the net cost of the gift in this example would be only £55.

In addition, tax relief against 2017/18 income is possible for charitable donations made between 6 April 2018 and 31 January 2019. This is provided that the payment is made before filing the 2017/18 tax return

Gifting stock market listed shares to a charity not only generates income tax relief on the donation, but also avoids a Capital Gains Tax liability for the donor. If, however, the asset is running at a loss, you should ideally sell it first before gifting the sale proceeds to the charity. This ensures that you can claim the capital loss to set off against any other capital gains as well as securing the gift aid relief.

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