Charitable Giving and Tax Relief: Doing Good While Saving Money

We all want a better world to live-a world of happiness, a good environment and ample space for different communities to thrive. Today, many people are relentlessly making conscious efforts to make this a reality by giving away a part of their wealth to less privileged ones. These acts of charity make the giver an active part of society and foster empathy. It encourages others to do charity. 

If you are also generous and have the urge to help needy people, know that such selfless acts also provide significant tax relief. Here, it is important to know that you must keep records of your donations to enjoy tax relief. So, let’s read this blog and understand the intersection of charitable giving and tax relief.

Income Tax Relief

If you are an individual engaged in charitable acts, you become eligible to pay less income tax. For the same, you need to deduct the value of your donation from your taxable income. Remember, you must declare the amount in your Self-Assessment tax return form in the same tax year. 

You can also claim income tax relief if you are an employee and choose to do regular charity from your salary via the Payroll Giving scheme. The good thing about this type of charity is that you can avail an immediate tax relief as you are donating before any tax deduction from your salary. 

Moreover, it is also possible to engage in charitable activities through Gift Aid. In such a case, charities and (CASCs) become eligible to claim an extra 25 pence for each £1 that you donate. You must make a Gift Aid declaration while donating. 

Capital Gains Tax Relief

As an individual tax payer, if you donate your land, property, or shares to a Community Amateur Sports Club (CASC), you get the capital gains tax relief ! Believe it or not, you are not required to pay any Capital Gains Tax. 
If you are an entrepreneur donating your qualifying business assets, like land, share or property, still you will enjoy a substantial relief on your capital gains. This will be on the qualifying assets. Government offers these tax reliefs to encourage the community to support these sports clubs. 

Corporation Tax Relief 

If you are an entrepreneur, you can make donations through your limited company for worthy causes while enjoying a reduced corporation tax. Many contractors are already making the most of this provision to reduce their corporation tax bills. However, you need to ensure that the donations should be made to charities registered with HMRC.

So, many types of tax reliefs are available if you are into charitable giving in the United Kingdom to make a positive impact and encourage others to engage in philanthropic efforts. However, it is crucial to understand the tax implications and stay informed about the changes in the UK tax laws (if any) to avoid any issues with the tax authorities.