November 13th, 2015

5 Don’ts of Giving to Charity

For many people across the UK, today is the day they can get away with doing ridiculous things that would normally see them getting the sack or up in front of a judge on public order offences.  Yes, today is the BBC’s annual Children In Need appeal.

Those reeling from Terry Wogan’s last minute withdrawal from tonight’s proceedings can console themselves that hopping on one leg all day while whistling the national anthem will still be in aid of a good cause, despite the absence of those famous dulcet tones.

We’re a charitable bunch in the UK.  According to the Charities Aid Foundation, £10.6bn was donated to charity in the UK in 2014 so giving to charity is a common and routine activity.  Giving to charity is normally straight forward but there are some pitfalls that can mean taxpayers miss out on tax relief or charities miss out on bigger donations.  So, below is our list of don’ts when giving to charity.

1. Don’t forget to Gift Aid your donation

Applying Gift Aid to your personal donation to a charity means that the charity will receive £100 for every £80 you donate.  In order for Gift Aid to apply you must make a declaration that you are a UK taxpayer when you donate.  Most charities draw clear attention to the declaration but it can be quite easy to miss the Gift Aid tick-box in the rush to make the donation.  If you miss the declaration, then the charity will miss out on a further 25% from the government.

2. Don’t forget to claim additional tax relief

If you are a higher or additional rate taxpayer then you can claim additional tax relief at your marginal rate of tax on your charitable donations.  This can be done on your Self Assessment tax return or by asking HMRC to amend your tax code.  For every £80 donated to charity, a higher rate taxpayer will receive a reduction in their tax liability for the year of £20.

3. Don’t miss out on getting additional tax relief sooner

Donations made in the current tax year (2015-16) can be carried back into the previous tax year (2014-15).  This is especially useful if you were a higher rate taxpayer in 2014-15 but will be a basic rate taxpayer in 2015-16.  To get relief you simply include the 2015-16 donations on your 2014-15 Self Assessment tax return or ask HMRC to send you a P810 form.  The claims need submitting to HMRC prior to the 31 January following the previous tax year.

4. Don’t donate from your company if it is loss-making

If your company makes a loss, then the loss can normally be used to reduce the profits of the previous accounting period or rolled forward to reduce future profits. Utilising losses in this way will save the company corporation tax at 20% on the amount of the loss.  Donations made by a loss-making company, however, cannot be included within the normal trading loss which means that no tax relief will be obtained at all for such donations.

5. Don’t sit in that bath tub of beans for too long…

…unless you want wrinkly orange skin for the next fortnight!

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Giving Limited Companies


John manages a wide portfolio of owner managed businesses and oversees the smooth operation of the firm’s payroll department.

After obtaining his degree in mathematics from the University of Liverpool, John joined Jonathan Ford & Co in 2004 and qualified as a chartered accountant four years later. John likes to keep abreast of developments in tax and accounting and is responsible for the mentoring of junior staff.

Outside of work, John enjoys keeping fit and is a Liverpool FC season ticket holder.

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