Posted on Aug 26, 2015 in Private Client by Murray Etherington
The news that Cecil the Lion had been killed in Zimbabwe has grabbed the attention of the world in the past few weeks. Like when many tragic events hit the headlines, people look for a way that they can help to make a difference.
As a result of this, there has been a surge of charitable donations to conservation and animal welfare charities in recent weeks. Oxford University Wildlife Conservation Unit announced last week that over £500,000 had been donated to them in just a number of days following Cecil's death.
People often donate to charities through TV shows, online and to charitable workers in the street. Many of these donations make use of the Gift Aid scheme, which allows the charity to claim back the tax on your gift. Therefore for every £1 you donate the charity can claim an extra 25p. Not everyone can claim Gift Aid as you need to have paid enough tax in the current tax year to qualify. Aside from the income tax benefits, any gifts to charities are exempt from inheritance tax, unlike larger gifts to children or friends, and can be a useful tool in estate planning.
Particularly useful is leaving gifts to charities in your Will. Any amount that is left to a charity in your Will is exempt from Inheritance tax. The value of the gift is taken off of your estate before Inheritance tax is calculated. Also, if you leave a legacy of at least 10% of your estate to charity in your Will, any inheritance tax payable on the rest of your estate would normally be at the reduced rate of 36% instead of the normal 40%. The 10% of your estate can be made up of a specified amount of cash, an item or items or a share of the residue (everything that is left over after the other legacies are paid out). This obviously means there is a potentially significant reduction in a tax bill but also provides the peace of mind that your money is going to a worthwhile cause.
Charitable giving can be useful in tax planning but it also allows you to benefit a particular cause or campaign that is close to your heart. Whether it is large multi-national or a smaller local charity your donation can make a difference. Making these gifts in lifetime, through your Will or both will depend on your own preferences and individual circumstances.
If you have any questions about charitable giving or wish to discuss your options, contact either Murray Etherington in our Private Client Department on the details below.
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