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Giving to charity need not be taxing  

Mark Atherton and James Charles explain how to boost your donations to good causes

Millions of us give money to charity each year, but many do so haphazardly. We might fork out a couple of quid for a copy of The Big Issue or fling a few coppers in a collecting tin, but as National Giving Week kicks off on Monday, charities are urging us to donate more regularly in ways that allow them to squeeze every penny from our pledges.
One of the easiest ways to make a donation stretch further is to tick the Gift Aid box every time you give money. The Gift Aid scheme allows charities to reclaim the basic-rate tax on the money that you donate. For every pound you give, charities can recoup an additional 28p. Even better, the charity undertakes to do all the paperwork to claim back money from the taxman.

But it is not only charities that can benefit from tax breaks. Higher-rate taxpayers can also claim tax relief on donations made to charity. Alternatively, they can indicate on their self-assessment forms that they would like the tax refund to go directly to charity as a Gift Aid payment.

But there are limits to the taxman’s largesse. Revenue & Customs insists that those who claim Gift Aid or tax back have paid sufficient UK tax to cover the tax relief.

Workers can also boost donations by giving money through their pay packets. The payroll-giving scheme allows employers to deduct charitable donations from workers’ pay before tax is deducted.

A gift of £100 costs a basic-rate taxpayer only £78 and a higher-rate taxpayer £60. Employees can decide which charity or charities to give to, as long as they are registered in the UK. The normal minimum donation is £1 a week. About 600,000 employees donate in this way via 7,800 company schemes.

Another easy way to boost charity coffers while minimising the impact on your wallet is to give shares. If you have a tiny holding of shares that would be uneconomical to sell, you can donate them to Share- Gift. This charity bundles them together with other people’s unwanted shares and sells them on the stock market. Since its launch in 1996 ShareGift has given £10 million to 1,200 UK charities.

Shares held in certificated form can be posted to Share- Gift, 5 Lower Grosvenor Place, London SW1W 0EJ.

While many of us give money during our lifetime, charities rely most heavily on legacies left in wills. About 70 per cent of us plan to leave something to charity in our wills, according to recent research, but less than one in ten of those who died last year with a will actually did so. Despite this, charitable organisations received a total of £1.6 billion from legacy donations last year. Jonathan Parris, director of Remember A Charity, says: “Legacies are the largest single source of voluntary income to UK charities.”

The main benefit of leaving a legacy is that you can donate money that you might not have access to in your lifetime when your wealth is tied up in property and possessions.

Medical charities traditionally benefit most from legacy donations, as people show their gratitude for life-saving treatment, care or support. Cancer Research UK uses its £130 million annual legacy income, the biggest in the UK, to fund half its research budget.

However, thousands of other smaller charities in the country rely just as heavily on charitable wills. A £100,000 legacy to a local Ramblers Association allowed the group to open a long-distance walking trail in Devon last March, in honour of its benefactor.

Giving money to charity in your will is another handy way to sidestep the taxman. If your total estate is worth more than £285,000, your estate will have to pay tax at 40 per cent on everything over this inheritance tax threshold, unless you leave the excess cash to charity, a political party or an institution such as a hospital or museum. Leave £295,000 to your children and they will have to pay £4,000 in tax on the £10,000 over the threshold. Donate the £10,000 to a charity and it gets to keep the whole amount.

If you decide to remember a charity in your will, the first thing to do is to check that the group you had in mind has charitable status and is registered in the UK. You can do this on the Charity Commission’s website at www.charity-commission.gov.uk.

Legacies can also end up in the wrong hands if the name on your will is incorrect. If a generous benefactor leaves £5,000 to Cancer Research UK, the money may never reach the charity if he or she failed to include “UK” in the title. Instead, it will be assumed that the benefactor intended the money to be split between several charities specialising in cancer research.

CASE STUDY: Glad of the chance to give something back to cancer research

Celia Twining has left a legacy in her will to Cancer Research UK, Breakthrough Breast Cancer and the Royal Marsden NHS Foundation Trust, having received treatment for breast cancer in the hospital’s Surrey unit eight years ago.

A year after doctors gave her the all clear, in April 1999, Mrs Twining, left, used a free solicitor service offered by Cancer Research UK to discuss her will and the option of leaving a legacy.

With no children and having separated from her partner only months before cancer was diagnosed, the retired social worker from Hove, East Sussex, has chosen to leave a proportion of her estate to the three causes. The Royal Marsden Foundation Trust will receive the bulk of her legacy fund and she has specified in her will that she would like the money to go towards research and development.

The 57-year-old says: “I felt so lucky to have survived cancer and I had received such excellent treatment at the Royal Marsden that it was a way of giving something back.

“We are lucky that there are organisations such as Cancer Research UK. The advances in cancer treatment from which I benefited were possible only because people had left money to these organisations in the past. Without continued funding they would not be able to continue the vital work that they are doing.”

Mrs Twining, who now works as a film and television extra, has two brothers and a sister who she believes would support her decision to leave some of her estate to charity, although it is not something that she has discussed with them yet.

She has a pecuniary legacy, which means that she is leaving a fixed sum. However, the value of her house has increased since she wrote her will, so she plans to increase the amount that she will give to charity.

For more on consumer affairs visit www.timesonline.co.uk/consumeraffairs

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