Charitable giving the options

There are now a number of options to consider when giving or gifting money or other assets to charities. In a nutshell they are:

1. Gift Aid - if you make a cash donation to a charity and sign its gift aid declaration form the amount of your gift is deemed to be received by the charity net of basic rate tax. The charity can subsequently claim back the deemed tax credit and significantly increase the value of the gift. To qualify your donation must be paid out of your taxed income. If you don't pay tax you cannot make a Gift Aid donation. If you are a higher rate tax payer you can claim tax relief at the marginal rate, currently 40%-20%, or 20%.

2. Giving through your pay or pension - effectively the donation will be deducted from your gross pay or pension providing you with full tax relief.

3. Giving assets to charities - if you give UK land, property or shares listed or traded on a recognised stock exchange, to a charity you can claim income tax relief. In most cases these transfers will also be free of a capital gains tax charge.

4. Leaving gifts in your will - the amount of the gift will be excluded from the valuation of your estate for inheritance tax purposes.

5. Gift via your self assessment tax return - this is a very cost effective way to gift donations to a charity. You give permission on your return for a tax refund to be made direct to the charity. When HMRC make the payment they add on the tax credit and a 3p supplement. In this way the charity has no additional administrative cost to reclaim the Gift Aid tax.