The Benefits of Charity Support

According to the Charities Aid Foundation (CAF) Giving Report 2023, in 2022 people in the UK gave £12.7 billion to charity (an increase from £10.7 billion in 2021). Interestingly, animal welfare topped the list of causes donated for all months in 2022, except March and April when it was overtaken by overseas aid and disaster relief, likely due to the response to the war in Ukraine.

Woman and older people are more likely to have taken part in a charitable activity, while people here in the South East were slightly more likely to give to charity – at 87% compared with the national 84% average. In terms of donations and sponsorships, again those in the South East (and South West) were more likely to have reportedly donated or sponsored someone for charity in 2022 (64% versus 59% average).

One question we get asked by clients filling-in their self-assessment tax return, is should they tick the box saying they’ve donated to charity during that tax year? The truth is that most of us have sponsored somebody undertaking a sponsored activity or donated some money to charity. When it comes to including that information on the form, the short answer is that, unless you are a higher rate taxpayer, it’s best to tick the ‘no’ box. It won’t affect what you pay in terms of tax or what you can claim back.

However, higher rate taxpayers, who are paying 40%, can claim back the difference between higher rate and basic rate tax on the value of their donations in personal tax relief. If that applies to you, then it’s worth making a note of the charitable donations you make during the year. If you tend to make most of your donations via one of the online sites – such as JustGiving – then you should be able to view what you’ve given during that period.

To claim this back, you will have had to have made a Gift Aid declaration. Assuming you pay tax, we’d always suggest that everyone does this to benefit the charity – as it makes a real difference. On top of this, if you are a higher rate taxpayer, it means you will benefit too.

If you are a 40% rate taxpayer, for every £1 donated, an extra 25p will go to the charity in Gift Aid, while you can claim back another 25p, as long as you’d filled-in the Gift Aid declaration.

According to CAF, just over half (54%) of those with an income over £50,571 a year are aware they can claim tax relief on donations to charity but a third (35%) are unaware. You can also claim for relief for four years’ worth of previous donations through tax ‘overpayment relief’ with HMRC.

If you run a limited company, you will also pay less Corporation Tax if you give the following to charity:

• Money.
• Equipment or trading stock (items you make or sell).
• Land, property or shares in another.
• Sponsorship payments.
• Employees (on secondment).

You can claim tax relief by deducting the value of your donations from your total business profits before you pay tax. This is worth bearing in mind, particularly if CSR is important to your firm and you potentially have a charity of choice.

Here at Lewis & Co, we are supporting Myaware, the only charity in the UK dedicated solely to the care and support of people affected by myasthenia. It also raises awareness about these conditions and funds research to find new therapies to reduce the impact of myasthenia and, ultimately, find a cure.

If you want to know more about the tax implications of donating to charity, call us on: 01892 513515.