How to give to charity

GIVING to charity can be rewarding and tax- efficient if done properly. Here are Money Mail’s top tips.

n GIVE as you earn. This is the most tax-efficient way to give to charity. If your employer offers this option, you can give from your pre-tax pay.

It means a £ 1 donation has essentially cost you only 78p because you would otherwise have paid 20 pc income tax on it, and 2 pc National Insurance.

n GIFT Aid. This lets a charity reclaim basic rate tax already paid on your donation.

If you are a 40 pc taxpayer you can reclaim the remaining 20 pc tax paid on the donation — or 30 pc for higher rate taxpayers — through selfassessment. This extra money can either be given to charity or can be put towards next year’s tax bill.

Don’t forget to fill in a gift aid form when you take unwanted goods to a charity shop, as you and they can reclaim the tax on the purchase price as well.

For bigger charity donors it may be worth taking out a Charity Account through the Charities Aid Foundation. This account comes with a cheque book and card. The key attraction is that gift aid at basic rate tax is reclaimed automatically and the statement acts as a record of charitable giving for tax purposes.

The minimum donation is typically £ 100 lump sum or £ 10- a- month direct debit.

However, the account charges 4 pc each time money is paid in, up to a value of £17,500 a year.

n CHARITABLE bequests. Any money left to charities in a will is paid out before the size of the estate is assessed for inheritance tax purposes.

An added benefit is that from April 6, anyone leaving 10 pc or more of their estate to charity will pay a reduced rate of 36 pc, rather than 40 pc, on the remainder of the estate liable for inheritance tax.