Most of us give to charity from time to time, whether sponsoring a colleague in the Marathon or buying a ticket to the annual charity carol concert. But do we make the donation in a way that attracts tax relief?
Give As You Earn may be the answer. It is an attempt by the tax man to make giving to charity hassle-and tax-free and is already used by over 3,000 employers.
The scheme is set up by your wages department so that staff can make charitable contributions directly from gross pay, which means they are tax free. Setting it up is easy. Your business 'contracts' with an agency charity, which registers it with the Inland Revenue, which then gives you the go-ahead.
So, how does the tax saving work? A £10 per month gift to Save the Children will only cost an employee paying tax at the basic rate (currently 23%) £7.70, although the wage slip will still show £10 as a gross deduction.
Gifts can be made to any recognised UK charity - including local causes.
The scheme is flexible. Traditionally, employees have chosen the charities they want to give to and how much. The money is then deducted every month before tax. But, instead of giving to the same cause each month, many employees now opt for the Personal Charity Account, where money is paid into their own charitable 'pot', from which they make planned and/or spontaneous tax-free gifts to charities using either their CharityCard or charity chequebook. Other employees group their gifts together on a monthly basis.
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Julia Griffin is new clients adviser for Give As You Earn. 0171 400 2300.