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Charities lose out on £1bn in donations

Inefficient donations gift cash to HMRC

In the past year, UK adults gave £10.6bn to charity, but they could have given an extra £1billion at no extra cost to themselves, according to new research from Independent Financial Adviser website unbiased.co.uk.

According to Unbiased.co.uk’s annual ‘TaxAction’ report, the amount given to charity could have been boosted by nearly 10% (nearly £1 billion in 2007/08) if donors had made the most of the tax allowances available to them.

Giving through Gift Aid

UK taxpayers can donate to charity tax efficiently through the Gift Aid scheme. Under the Gift Aid system, charities can reclaim basic-rate tax on a donation.

David Elms, Chief Executive of Unbiased.co.uk commented: ‘With almost 28 million Brits donating to charity in a typical month, UK taxpayers remain very generous with their donations. Despite fears of recession looming, many individual donors have increased their charitable support in 2007/08, but it is unfortunate that not all donations are being made in a tax-efficient manner. Nearly £1 billion is going to the tax man when this could be easily avoided by making use of Gift Aid.’

Payroll giving through your employer

Payroll giving (Give as You Earn) is another tax efficient form of donating to charity. The scheme allows employees to contribute a regular sum directly from their pay packet and given to the charity of their choice without tax being deducted.

Elms continued: ‘Using the most tax-efficient methods of donation allows those who are very active in philanthropy, and also those who give one-off gifts in response to specific events, to ensure the worthy cause gets as much money as possible. No matter how small or large your donations, charities will always be grateful for you using the most tax effective way of making the donation.’

For more detail on tax-efficient giving, see the Which? guide to giving to charity.

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