There are now a number of ways that charities can encourage donations by promoting the various tax schemes available.
Over the last five years the government has brought in a range of changes to the tax system to make it simpler for charities to make the most of tax reliefs, so that more money can go to good causes.
It’s now easier for charities to receive gift aid
Charities online, a system that helps charities to claim gift aid faster, was introduced in 2013. Instead of having to submit paper claims for tax reliefs through the post, charities can now submit them online.
Almost 95% of charities now use charities online to claim gift aid. The majority of claims are processed within five working days, down from around 15 days.
It’s now simpler for charities to receive government support on small donations
If someone donates a small amount of money to a charity – for example, by giving it to a charity vendor in a high street – it’s often not possible (or practical) for the donor to provide formal consent for gift aid to be claimed on that donation.
Through the gift aid small donations scheme charities can now claim a gift aid-style top-up on these small donations, up to a limit of £5,000 per year. This limit will increase to £8,000 per year from April 2016.
An outreach team now helps charities claim tax relief
To date, HMRC’s outreach team has delivered face-to-face presentations to over 650 represented charities to spread awareness, increase take-up, and help charities to successfully claim tax relief.
Works of art donated to the nation now receive tax relief
The cultural gifts scheme was introduced in 2013 and allows taxpayers to pay a tax bill by donating eligible works of art to the nation.
People donating to charity in their will can now benefit from a lower rate of inheritance tax
If people leave at least 10% of the net value of their estate (its worth, minus any debt, other liabilities and reliefs) to charity, then 36% inheritance tax can be paid instead of 40%. This was introduced in 2012.
Local amateur sports clubs can now claim gift aid on donations too
The government has amended the law so that local sports clubs registered as community amateur sports clubs can receive corporate gift aid, to help these clubs to benefit their local communities.
A new tax relief has been created to encourage investment in social enterprises
The social investment tax relief scheme has been created to encourage people to invest in social enterprises, including charities.
Individuals making an eligible investment will be able to deduct 30% of the cost of that investment from their income tax liability.