1. Understand Gift Aid

Gift Aid allows UK charities to claim an extra 25p for every £1 you donate, at no additional cost to you. For higher-rate taxpayers, you can claim additional tax relief on donations through your Self Assessment tax return. Keep records of your Gift Aid declarations to ensure you claim what you’re entitled to.

2. Donate Appreciated Assets

Instead of giving cash, consider donating assets like stocks or property. In the UK, you can claim relief on both the value of the asset donated and any associated Capital Gains Tax, making it a highly tax-efficient option.

3. Make Regular Donations

Setting up regular donations through direct debits can streamline your giving and help charities plan more effectively. It also simplifies record-keeping, as regular contributions are easier to track.

4. Use Payroll Giving

Many employers offer Payroll Giving schemes, allowing you to donate directly from your pre-tax salary. This method ensures immediate tax relief and is a hassle-free way to give.

5. Check Charity Eligibility

Ensure the organisations you support are registered with HMRC for tax relief. Donations to eligible UK charities and community amateur sports clubs qualify for Gift Aid and other tax benefits.

6. Time Your Donations Strategically

If you’re nearing the end of the tax year, consider making donations now to maximise relief on your upcoming tax return. Timing can be especially useful for managing your tax band if you’re close to a threshold.

7. Claim Relief for Volunteer Expenses

If you volunteer for a charity, you may be able to claim tax relief on expenses incurred, such as travel or equipment. Keep detailed receipts and records to support your claim.

8. Consider Donor-Advised Funds

For more significant contributions, a donor-advised fund allows you to make a charitable gift, receive immediate tax relief, and recommend grants over time. This option provides flexibility and maximises impact.

9. Bundle Donations

To increase tax efficiency, consider “bunching” multiple years’ donations into one tax year. This approach can push you over the threshold for higher tax relief while still supporting charities over time.

10. Work with a Tax Advisor

Maximising the tax benefits of charitable giving requires careful planning. A tax advisor can help you navigate the rules, identify opportunities, and ensure compliance with HMRC regulations.

The holiday season is a time for giving, and charitable donations not only bring joy to others but can also offer significant tax benefits. If done strategically, your generosity can work to reduce your tax liability while supporting causes close to your heart.

Here are our top tips to maximise tax reliefs through charitable giving this festive season...

How to Make Charitable Donations Work for You

Capital Gains Tax Expertise: The Tax Faculty LLP Managing Partner Charles Tateson Named UK Capital Gains Tax Advisor of the Year 2023

The Finance Monthly Taxation Awards recognises the achievements of tax professionals from around the globe.

Winning such an award is no small feat. It is a reflection of hard work, extensive knowledge, and an ability to navigate the intricacies of the UK tax system.

Read more about Charles and the award here.

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