Tax-Effective Giving

Tax-effective giving allows charities and donors to make the most of voluntary donations.

It is a simple message but can make a big difference to an organisation’s fundraising capacity. There are a number of different ways to benefit from tax relief, including:

Gift Aid: Charities can claim relief on tax paid on voluntary donations made by UK taxpayers at no extra cost and minimum effort.This is by far the most well-known and utilised relief.
Legacy Giving: By leaving a gift to charity in their will, individuals can reduce their inheritance tax liability.
Payroll Giving: Employees can donate straight from their gross salary, giving immediate tax relief and making gifts go further.
Share Giving: Donors can get substantial relief on their income tax bill when making donations of shares.

There are also other tax-effective giving options, such as relief for businesses making charitable donations.

2012 Budget

The 2012 budget contained no new measures that are aimed at fundraising, as the few points relevant to Gift Aid came from the 2011 budget, which is explained below.

2010 and 2011 Budget

The 2011 Budget, announced on the 23 March, contained a number of changes to Gift Aid and promised to consult on a number of issues that could affect charities. Further information is available in the 2011 Budget Factsheet.

The 2010 Budget, announced on 24 March, introduced a number of changes for charities in terms of tax relief and further information is available in the 2010 Budget Factsheet.

An important change to HMRC's definition of a charity

HM Revenue & Customs (HMRC) have announced changes that will affected all charities that do not claim Gift Aid but do take advantage of other UK charity tax reliefs. The changes will be introduced from April 2012.

Click here to find out more from HMRC's website

New guidance on Gift Aid declarations

HM Revenue & Customs (HMRC) Charities published updated guidance on Gift Aid declarations and provided new model declarations on 24 February 2012.

HMRC have published a guidance note to accompany these changes in order to provide clarity to those affected.

Click here to access the guidance note on HMRC's website

Help and Advice

The Institute hosts a Tax-Effective Giving microsite which includes comprehensive online information about all forms of tax-effective giving, aimed at small charities, fundraisers and the general public.