Registered UK Charities are losing out on nearly £900 million due to people failing to donate tax-efficiently. Research* from unbiased.co.uk, the professional advice website, shows that donors are not making the most of tax breaks and as a result are wasting millions that could be going towards good causes.
In 2009 UK adults gave a total of £9.9 billion** to charity however, according to unbiased.co.uk’s annual ‘Tax Action’ report (which focuses on the total amount we waste in tax each year), this amount could be boosted for charities by nearly 9% if donors had made the most of tax efficient donation schemes.
The £871 million which is currently being retained by the taxman could instead make a real difference to charities if donors made use of tax relief schemes such as Gift Aid and Payroll giving. Payroll giving (Give as You Earn) gives employees the opportunity to contribute a regular sum to a charitable organisation of their choice. Payments are deducted from their salary by the employer before tax is deducted, for example, if an employee who pays tax at the basic rate of 20 per cent donates £8 they will actually be making a £10 donation to their charity.
Gift Aid is a form of opt-in tax relief for UK taxpayers on money they have donated to charities, whereby the organisation can reclaim basic rate tax on a donation. The charity will take the donation, which is money the donor has already paid tax on, and reclaim the basic rate tax from HM Revenue & Customs (HMRC) on the 'gross' figure, which is the amount before basic rate tax (20 per cent) was deducted. For example: if you give £10 using Gift Aid, the charity will receive £12.50.
Karen Barrett, Chief Executive of unbiased.co.uk, comments, “Although UK taxpayers are experiencing tough times, there are still millions of people donating to charity in a typical month. With just a few simple changes to the way they make their payments many could give even more to their chosen charity. Increased awareness of tax relief schemes would significantly impact the amount currently being wasted and whether you donate monthly or contribute one-off amounts, no matter how big or small, using the most tax-efficient methods of making donations will ensure worthy causes get the maximum amount of money possible.
To find a local independent financial adviser who can advise you on being tax efficient you can go to unbiased.co.uk and use our ‘Find an IFA’ search.
* TaxAction 2010 report produced for IFA Promotion by RAKM, based on a specially commissioned analysis of HMRC and a range of other official data sources.
** Charities Aid Foundation and National Council for Voluntary Organisations: UK Giving 2010: An overview of charitable giving in the UK in 2009/2010, available athttp://www.cafonline.org/PDF/UK%20Giving%202010.pdf
Anna Schirmer/Anna Moulds/Emily Falla, Lansons Communications: 020 7294 3682
For expert commentary or case studies from over 150 media-friendly IFAs, journalists should visit www.unbiased.co.uk/bluebook.
About unbiased.co.uk, the professional advice website
The unbiased.co.uk portal is a free and confidential UK-wide search matching consumers with local professional advisers: ‘find an IFA’, ‘find a mortgage adviser’, and ‘find a solicitor’, and is currently inviting registrations for its ‘find an accountant’ service. These searches enable consumers to find professional advisers by postcode, area of specialism, qualification and payment method. In 2009, unbiased.co.uk fulfilled half a million searches for local, professional advice.
IFA Promotion, the organisation behind unbiased.co.uk, is now in its 21st year, and was set up to promote the benefits of independent financial advice to consumers. IFAP is sponsored by the following companies:
Registered Office: unbiased.co.uk is the consumer brand of IFA Promotion Ltd, 90 St. Vincent Street, Glasgow G2 5UB. Registered in Scotland: No. 114606