If you make a charitable donation under Gift Aid, your chosen charity gets a 25% boost from the taxman. You can also claim back higher-rate tax on the gross donation (provided you are higher-rate taxpayer), says Tax Tips & Advice. But there are a some less well-known ways of benefiting from gifts. These will become even more worthwhile once Alistair Darling’s new tax rates kick in next year (visit www.hmrc.gov.uk for the rates).
Firstly, you should be aware that some organisations, such as the National Trust, have gift aid membership arrangements. So a family membership of £105 after tax relief at the maximum 2010/2011 rate of 60% would cost you just £63. Secondly, if you make charitable gifts that can be converted into cash, you can claim tax relief too.
So, say you donate 300 CDs to a charity shop that are logged in your name and eventually sell for £900. This £900 is treated as a cash donation and grossed up to £1,125 by the taxman. The charity receives the extra £225 and you can claim higher-rate tax relief on the gross donation of up to £450. “How’s that for a win-win result?”