Download - Workshop 5 - Charities Aid Foundation
![Page 1: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/1.jpg)
Tax Can Make You Money!
FANWoE - Black Development AgencyTuesday 13th July 2010
Panikos EfthimiouTraining Manager – CAF (Charities Aid Foundation)
![Page 2: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/2.jpg)
UK Giving 2009 (CAF and NCVO)
charitable giving dropped by 11% to £9.9bn
the recession has driven giving back to 2006/7 levels
regular giving is increasing but cash remains most common method of giving
54% of adults still giving…a drop of 2%, which means 774,000 fewer people giving
only 4 in 10 donations are ‘Gift Aided’ – so £750m still remains unclaimed
![Page 3: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/3.jpg)
Main methods of tax-efficient giving
Gift Aid
Payroll Giving
Shares
Legacies
![Page 4: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/4.jpg)
What is Gift Aid?
For every £1 a UK tax-paying donor gives to yourcharity you will still* get an extra 28p from HerMajesty’s Revenue Customs (HMRC)…..
at no extra cost to the donor!
* commitment from government until 2011
![Page 5: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/5.jpg)
Gift Aid today
enables the charity to reclaim basic rate income tax (20%) = 25p on every pound donated by UK taxpayer
transitional relief (not tax relief but ‘government expenditure’) will top-up donations by 3.2 pence per pound = 28.2p
higher rate taxpaying donors can reclaim the difference
![Page 6: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/6.jpg)
Gift Aid and Higher Rate Taxpayers
£25.00
£25.00
Charity claims
40% taxpayer
20% taxpayer
£100
£100
Donation
£3.20
£3.20
Transitional relief
£128.20
£128.20
Total donation
£25.00
Donor reclaims
£160.25
£128.20
Full potential
NB Individuals that complete the self assessment form (SA100) can donate any tax repayment that is due to them directly to charity - Gift Aid can also be applied to this donationFor a charity to benefit from this, they must register separately with HMRC for a SA Donate reference number
50% taxpayer
£100 £25.00 £3.20 £128.20 £37.50 £176.28
![Page 7: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/7.jpg)
Info to higher rate taxpayers (example)
GOOD NEWS…….GOOD NEWS!
“If you pay tax at either of the higher rates you canclaim further tax relief in your self-assessment taxreturn. Please remember that you can, if youwish, donate this to charity….which the HMRC willalso Gift Aid!”
![Page 8: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/8.jpg)
Gift Aid – The Rules
donor must pay at least as much Income Tax and/or Capital Gains Tax as the charity claims back in Gift Aid from HMRC
donor must complete a Gift Aid declaration (paper or oral)
donor ‘thank you’ gifts cannot exceed HMRC’s ‘Donor Benefit Rules’
![Page 9: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/9.jpg)
The health check
“I am a UK taxpayer and pay an amount of IncomeTax and/or Capital Gains Tax at least equal to thetax that can be reclaimed on my donation(s).”
![Page 10: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/10.jpg)
The benefits valuation rule
SINGLE DONATION MAXIMUM BENEFIT
£0 - £100 £100 - £1,000>£1,000>£10,000
25% of donation £255% of donation£500
![Page 11: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/11.jpg)
Examples of Gift Aid declarations
“Please treat this donation and all donations I makefrom the date of this declaration as Gift Aiddonations unless I notify you otherwise.”
Declaration for new donors
![Page 12: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/12.jpg)
Examples of Gift Aid declarations
“Please treat all donations I’ve made during the pastfour years and all donations I make in the future asGift Aid donations until I notify you otherwise.”
Declaration for existing donors (retrospective claims)
NB HMRC pay interest on retrospective claims!
![Page 13: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/13.jpg)
![Page 14: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/14.jpg)
Gift Aid can be claimed on…
cash cheques direct debits standing orders credit/debit cards postal orders and can be made in any currency
(as long as donor is a UK tax payer)
![Page 15: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/15.jpg)
Gift Aid cannot be claimed on…
purchase of most goods or services eg Christmas cards and jumble sales
raffle and lottery tickets donations already receiving tax relief
eg charity vouchers or payroll giving in-kind donations
![Page 16: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/16.jpg)
Other potential Gift Aid – greyish areas!
sponsorship events membership events (not the admission price) auctions charity shop donations
NB the benefits valuation rule may affect any ‘gift aidable’ donation
![Page 17: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/17.jpg)
Audit trail
Charities need to keep a clear audit trail to demonstrate to the HMRC that they havereceived the donations they are reclaiming tax on, aswell as having the correct Gift Aid declarations.
![Page 18: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/18.jpg)
Easy guide to Gift Aid…getting the money!
get declarations from all your UK tax-paying donors complete new HMRC charity application form when making a claim charity must use the new
‘intelligent’ R68 (i) which will automatically calculate repayments for you! (also available in paper form)
HMRC are also reviewing claim/repayment process i.e. how much and how often…the charity sector will be consulted!
HMRC Guidance improvement: www.direct.gov.uk/giftaid.
![Page 19: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/19.jpg)
Useful contacts/further help for Gift Aid
Institute of Fundraising www.institute-of-fundraising.org.ukwww.tax-effectivegiving.org.ukHelpline: 0845 458 4586
CAF Charity Financial Services (inc Gift Aid reclaim)www.cafonline.org/charityservices01732 520 316
![Page 20: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/20.jpg)
What is payroll giving?
a way of giving to charity tax free scheme is processed by payroll giving agencies
(PGA’s) to provide an audit trail and prevent fraud all the PGA’s are listed on the HMRC website
“Costs you less to give more”
![Page 21: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/21.jpg)
Tax effective
So, for example, the donor pledges £10, and the cost is either £8.00, £6.00 or £5.00 (depending on tax rate) and the charity receives £10.00
(PGA’s normally deduct a small admin fee)
Donor pledges
Actual cost(20%)
Actual cost(40%)
Actual cost(50%)
Charity Receives
£5.00 £4.00 £3.00 £2.50 £5.00
£10.00 £8.00 £6.00 £5.00 £10.00
£50.00 £40.00 £30.00 £25.00 £50.00
![Page 22: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/22.jpg)
taxadvantage
employer matching
An added advantage
some employers offer matching on staff donations
others will pay the administration fee – some do both
good way for employers to support staff and is an incentive to get staff to join the scheme
![Page 23: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/23.jpg)
Employer Quality Mark Awards
Awarded for staff participation rates and ‘employersupport’…
Bronze – 1% employee participation rate Silver – 5% employee participation rate Gold – 10% employee participation rate
‘Employer support’ – pay admin fees, matchdonations or promoted during past 12 months
![Page 24: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/24.jpg)
What is the potential?
long-term donors
approx 724,000 individuals currently giving
24 million potential donors are paid via PAYE
there are over 2 million companies in the UK but…
only 10,000 are signed up to payroll giving
![Page 25: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/25.jpg)
How does an employer join?
completes two copies of the contract and one payroll registration form
sends the forms to PGA PGA forwards payroll registration form to HMRC,
signs both copies of the contract and returns one to the employer
once these are completed the company is ready to promote to employees
![Page 26: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/26.jpg)
How does an employee join?
fills in a form specifying their chosen charitable organisations and return it to their payroll department (or direct to charity)
deductions are made from the next available payday stop, start and change their donation or charitable
organisation whenever they wish can give to any charitable organisation in the UK
![Page 27: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/27.jpg)
![Page 28: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/28.jpg)
![Page 29: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/29.jpg)
![Page 30: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/30.jpg)
http://england.shelter.org.uk/donate/donate_through_your_payroll/donate_through_your_payroll
![Page 31: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/31.jpg)
Easy guide to payroll giving
register your charity with all the PGA’s in order to receive donations
if you have paid employees register your charity as an employer with a PGA
start contacting your corporate supporters (one-off donors, charity of the year partners etc)….do they have a payroll giving scheme?
practise by running an internal promotion in your own organisation
![Page 32: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/32.jpg)
Share giving
several million people in the UK own shares worth approximately £200 billion
£100 million is given as a gift of shares to charity each year
the average share gift is worth £7000
charities can sell shares or retain for future need
![Page 33: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/33.jpg)
A share donor…
must be a UK tax payer to receive tax benefits receives all the benefit (as with payroll giving) receives Income Tax relief and potentially Capital
Gains Tax relief too should consult a financial adviser
(subject to personal circumstances)
![Page 34: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/34.jpg)
Example – 20% taxpayer
individual donates shares worth £5000 – can claim income tax relief of £1000 (20% of £5000)
so donation has cost donor £4000, while charity has been given shares worth £5000
donor will not have to pay any Capital Gains Tax having given shares to charity
personal circumstances may change this
![Page 35: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/35.jpg)
Example – 40% taxpayer
individual donates shares worth £5000 – can claim income tax relief of £2000 (40% of £5000)
so donation has cost donor £3000, while charity has been given shares worth £5000
donor will not have to pay any Capital Gains Tax having given shares to charity
personal circumstances may change this
![Page 36: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/36.jpg)
Example – 50% taxpayer
individual donates shares worth £5000 – can claim income tax relief of £2500 (50% of £5000)
so donation has cost donor £2500, while charity has been given shares worth £5000
donor will not have to pay any Capital Gains Tax having given shares to charity
personal circumstances may change this
![Page 37: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/37.jpg)
Talking to potential shareholders
company newsletters charity newsletters/literature specific mailings to supporters face to face with major donors financial advisers
![Page 38: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/38.jpg)
Things to remember
ask if the donor is a UK tax payer consider your charity’s ethical policy keep accurate records suggest donor seeks independent financial advice don’t offer financial advice yourself…unless you
are qualified to do so
![Page 39: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/39.jpg)
Seeking help
CAF 03000 123 107 www.cafonline.org/shares
HMRC0845 302 0203 www.hmrc.gov.uk/shares
APCIMS (brokers)020 7247 7080 www.apcims.co.uk
IFA Promotion (financial advisers)020 7833 3131 www.ifap.org.uk
ShareGift 020 7337 0501 www.sharegift.org
![Page 40: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/40.jpg)
Legacies – leaving money to charity in a will
also known as a bequest
inheritance tax relief current threshold £325,000, and £650,000 for married
couples or civil partnerships (frozen at this level in 2010 budget until 2014/5)
current rate 40%
charitable legacies (bequests) are free of inheritance tax
![Page 41: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/41.jpg)
Legacies – key statistics
• they bring in £1.95bn a year to charities• pecuniary legacy has average value of £3,500• residuary legacy has average value of £51,300
while 75% of the population give during their lifetime, only 7% remember a charity in their will
can be: money (pecuniary legacy) specified item of value (eg jewellery, artwork,
vehicle)
![Page 42: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/42.jpg)
Legacies – motivations
existing donor of the charity connection with the cause – themselves or others always supported (even if not a donor) to save tax, or to stop tax man getting his hands on any
money no one else to give it to no one else needs it
Of course we cannot be sure but what drives people to dothis (unless each individual tells us!) but what is essentialis that charities continue promoting them
![Page 43: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/43.jpg)
Promoting legacies
regular/committed givers solicitor networks special one-off events – promoted in trade
magazines www.willaid.org.uk www.rememberacharity.org.uk
![Page 44: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/44.jpg)
Legacies – smaller budgets
local contacts solicitors and trustees articles in local paper legacy stories in newsletters including legacy request in talks
don’t be in a rush – this will take time!
![Page 45: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/45.jpg)
Other useful contacts
Institute of Fundraising www.institute-of-fundraising.org.uk020 7840 1000
Her Majesty’s Revenue & Customs www.hmrc.gov.uk/charities 0845 302 0203
CAF Charity Services www.cafonline.org/charityadmin01732 520 316
![Page 46: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/46.jpg)
Speak to me
Panikos Efthimiou
07720 405702
www.cafonline.org
![Page 47: Workshop 5 - Charities Aid Foundation](https://reader031.vdocument.in/reader031/viewer/2022020201/568c47771a28ab49168dfa95/html5/thumbnails/47.jpg)