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To boost giving to charity, in April 2000 the government introduced a range of new measures for UK taxpayers, making it simpler and more tax effective. Further measures were introduced in April 2002. Providing you are a UK taxpayer, you can hugely boost your charitable donations simply by giving in a tax effective way. The taxation rules applying to community foundations are the same as those that apply to all charities. Almost 70% of the population makes a regular donation to charity but few do so tax-effectively.
Using Gift Aid means that for every pound donated, the community foundation gets an extra 28% from the Inland Revenue. Gift Aid covers any donation from an individual UK taxpayer, so long as a simple Gift Aid declaration is completed. Higher rate taxpayers can reclaim the difference between standard and higher rate tax in their annual tax return – and this applies to donations made in the previous tax year and the current year. All you need to do is complete a Gift Aid form and send it off to the community foundation.
Companies simply pay the community foundation the full donation and claim full tax relief when calculating their profits for corporation tax.
Giving shares and securities to charity has long been a useful way of unlocking capital and passing it on to good causes. Since April 2000, giving made in this way has become even more attractive: individuals who give shares to charity are entitled to claim back full tax relief against the value of those shares. So, a gift of shares worth £1,000 will only cost a higher rate taxpayer £600, or £780 for lower rate taxpayers. Please note, while no capital gains tax will apply, where shares have fallen in value, the loss cannot be used to offset a CGT liability.
There are many reasons why giving shares might appeal to you. You might hold windfall shares that make little difference to you, but could make a big difference to a hard-pressed local cause. Or you may have inherited some shares which generate more paperwork than income. These could be turned into something of real value to others by donating these shares to a community foundation.
Whether the donor gives shares or gives cash through Gift Aid will depend on their individual tax situation and whether they want the community foundation or themselves to receive the greatest benefit.
Tax relief is possible for gifts of land and property and donors receive full tax relief from income and capital gains tax. As with share giving, you are entitled to claim relief for the full market value of the property donated.
Community foundation legacies are donations made as part of a will. It is a way you can leave something to your local area that will benefit people for generations to come. Charitable legacies are exempt from inheritance tax, and this reduces the total amount of tax paid on a donors’ estate. Depending on the size of the legacy, a charitable fund can be set up through Conrwall Community Foundation in your memory, which takes into account your charitable interests. Legacies can be set up through a solicitor or a community foundation
Setting up a payroll giving scheme at a company is straightforward and tax-efficient for employees, who can authorise their employer to deduct charitable donations from their pay before calculating Pay As You Earn tax. This way the employee automatically gets tax relief on the value of donations at his or her top rate of tax. There is no limit on the amount that can be given under the scheme tax free up to an employee’s maximum taxable earnings.
If you require any further information about supporting Cornwall Community Foundation, please contact Linda Whittaker on 01566 779333.
