How to give to charity AND yourself
BY Andy Webb
1st Jan 2015 Managing your Money
In terms of giving to charity, the UK is the most generous country in Europe, and fourth in the world. If you’re keen to help others, there are ways of donating that can also help your own bank balance—or allow you to donate a little extra.
Cutting down your inheritance tax bill
You can cut your tax bill significantly by leaving part or all of your estate to charity in your will. Any money you leave in a “charitable legacy” isn’t subject to inheritance tax. This means that there’s less tax to pay on the remaining money. You can also reduce the rate of inheritance tax due if ten per cent of your entire estate is left to charity.
Give directly from your payslip or pension
If you set up regular payments to a charity through your pension or workplace payroll, you’ll automatically be entitled to a discount on your tax contribution as you don’t pay income tax on donations. So if you give £1, it’ll actually only cost you 80p (for basic taxpayers) or 60p (for higher-rate taxpayers), with the taxman paying the rest. This makes it much cheaper for you than contributing directly, and the charity gets the same amount.
Add Gift Aid
This one is slightly different, but it’ll also boost your donation. As long as you’re not giving more than four times what you pay in tax each financial year, you can add Gift Aid to any donations you make. If you do this (usually by ticking a box when you donate), an extra 25p will be added by the government for every £1 you give.
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