Thoughts turn to charity at Christmas time, but make sure the government is doing its bit too. Payroll giving is tax-efficient as the donations are made before your income tax is worked out and deducted. So a higher-rate taxpayer who authorises a monthly payment of £10 to their chosen charity would save £4 (40% of £10), so the cost of the donation to them is £6. If your employer doesn’t run a Payroll Giving scheme, suggest they start one. Contact details for Payroll Giving agencies can be found on the HM Revenue & Customs website, or your employer could call the Charities helpline on 0845-302 0203.
“Giving shares to charity can also cut your tax bill,” says Jennifer Hill in The Sunday Times. When you give listed shares to a charity, the value is taken into account when calculating your taxable income. If you give shares with a current value of £10,000 (which you paid £1,000 for) to charity, you could get income-tax relief at your highest marginal rate (40%) on £10,000 and capital-gains tax relief on £9,000 at 18%. That amounts to tax relief of £5,620 for higher-rate taxpayers.