Giving ... and receiving

When you make a donation to a charity, you are very likely to find that you are asked to make your gift under the Gift Aid scheme. If you do so, and you are a higher rate taxpayer, then you are entitled to tax relief.

The reason is that the charity can reclaim the basic rate tax, which is deemed to have been deducted before your gift is made. The effect of this is that the charity can reclaim just over 28% of the amount you give. The bad news for charities is that from 6 April 2008, this will fall to 25% because the basic rate of tax is being reduced from 22% to 20%.

If you are a 40% taxpayer and donate £1,200 to charities over the year, you are entitled to nearly £277 of additional personal tax relief (£300 for 2008/09). And if you qualify for a tax refund, we can even tick a box on your Tax Return and have the refund made over to the charity of your choice - and that gift will also qualify for Gift Aid tax relief!

Donations can be made regularly - by direct debit, for example - or as a one-off. They do not even need to be made in cash - talk to us about gifts from business and gifts of non-cash assets.

Record keeping has become vital under self assessment. We need to be able to prove every figure on your Tax Return and you should keep personal financial records relating to your Tax Return for at least six years. Your entitlement to Gift Aid tax relief might provide an incentive.

Contact us for further information on the changes, and how they may affect you.