Newsreaders dressing up to dance like Lady Gaga, Dawn French kissing an uber-celebrity like George Clooney, Brad Pitt or Johnny Depp and a cavalcade of comedy to tickle your ribs – Comic Relief 2011 must be upon us. With tonight’s Red Nose Day festivities looking to raise millions for worthwhile causes, Which? Money gives you the top seven tips to give donations to charity.
1. Donate through Gift Aid
The Gift Aid scheme allows charities to reclaim the basic-rate of tax, 20%, for every charitable donation that you make. So if you donate £100 to a charity, it’ll actually receive £125. You can donate through Gift Aid if you’re a UK taxpayer, and if you’re a higher rate taxpayer, you can reclaim the difference between the higher and the basic rate (a further 20%) on all donations – which the HMRC allows you to donate to charity again.
2. Give to charity from your salary
Check to see if your employer runs a payroll giving scheme. Through this, you can support a charity via regular donations directly from your salary. Your donation is taken from your monthly salary before tax is deducted, so the charity can benefit from your full donation without having to reclaim anything from the HMRC.
3. Savings accounts donations
Plenty of building societies will make donations to charity from the interest that you accrue on your savings accounts, while others pay up to 1% of your balance to charity. Charity Bank, however, goes much further. It uses the money that you hold on deposit to lend to charities and community projects – over the past few years Charity Bank has lent out £138m, helping over 3.5 million people. The rates it provides aren’t best rate savings accounts but Charity Bank does have a best rate notice cash Isa account and it all goes to a good cause.
4. Cashback credit cards and donating
There are a few charity credit cards that are out there which donate to charity every time you spend, from providers like the Co-op and MBNA, but Which? research has shown that you’d be better getting a cashback credit card and donating your returns to charity – that way, you can donate through Gift Aid. The Virgin Money Charity MasterCard pays offers a cashback rate of 0.8% if you take the cash yourself, but even more if you donate it to charity as you can boost your donation with gift aid.
5. Leave a charity in your will
Donations to charity are exempt from inheritance tax (IHT), so your charity can benefit more if you make a specific donation in your will. If your estate exceeds the limit for IHT (£325,000 until 2014) then a charity would receive the full amount of a £10,000 gift, whereas your beneficiaries would only receive £6,000.
6. Give a donation of shares
Millions of pounds are tied up in wasted shares, which are of no value to their owners because they cost more to sell than they are worth. You can donate shares that you have, however large or small, through ShareGift. This aggregates and sells donated shares, giving the proceeds to a wide range of UK charities. You can also reclaim income tax relief on donated shares and give this to charity again through Gift Aid.
7. Donate by direct debit
How many times have you been approached by someone on the street to donate to charity? If you don’t already, avoid these people – every time you sign up to donate through a ‘chugger’ (charity reps on the street), the firm employing them is paid commission. Your best bet is to pick your charity of choice and set up a direct debit – at least you’re assured that your money is going straight to the charity.
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