In the 48 hours after the attack in Manchester last week, more than £2m had been donated to charity appeals for the victims and those who went to their aid, all via pages set up on charity fundraising website JustGiving. Yet the site came under fire, notes the Daily Mail it stood to pull in an estimated £100,000 from the appeals, thanks to the 5% cut it takes of any donations. So while the convenience of fundraising websites can be great for raising and donating money quickly, it's always worth checking how much of your cash goes to your chosen cause.
JustGiving's 5% cut is one of the highestfees out there, while Virgin Money Givingtakes 2% of donations. You also need to read the small print. For example, JustGiving states that it "takes a 5% fee from each donation made through the site (which we take from the Gift Aid wereclaim)." This sounds like the fee is takenjust from the Gift Aid contribution, when it is actually taken as a percentage of the total amount (so if you donate £100, Gift Aid will lift that to £125 see column and the site will take 5% of that).
There's nothing wrong with charging clearly these fundraising platforms need to cover certain administrative expenses. But some sites charge less than others. If you want your money to go further, then donate directly via the charity's own website, or failing that, use a cheaper platform. For example, Charity Choice gives donors the choice of whether or not to pay a 25p fee; if they don't, this gets passed on to charities. You should also factor in credit or debit card fees.
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You may also be unaware that charities have to pay to receive donations from some sites. Virgin Money Giving charges a £120 one-off fee, while JustGiving charges £15 or £39 a month, depending on how much is raised. MyDonate, Charity Choice, Givey and Every Click don't charge charities at all (although they may have to pay transaction fees). Finally, watch out for fraud. JustGiving had to stop withdrawals from 200 Manchester-related fundraising pages over fears they were fraudulent. If you are concerned, donate directly to registered charities.
How does the Gift Aid scheme work?
Gift Aid allows charities to reclaim the basic-rate income tax that you have paid on your donation. It means that for every £100 you donate, the charity ends up with £125, as long as you complete a Gift Aid declaration which gives the charity permission to reclaim your tax. If you are a higher or additional rate taxpayer, you can claim the difference between the higher rate and basic rate of tax on the gross value of your donation. So, in this example, the higher-rate taxpayer can reclaim another £25 (20% of £125) through their tax return.
You can also reclaim the income tax you've paid on admissions to charitable attractions such as museums, art galleries and stately homes, as long as your ticket price counts as a donation. For it to class as a donation for Gift Aid purposes, you must pay at least 10% more than the standard ticket price, or pay for a 12-month membership giving you a year's access to the attraction. If you do that, the charity gets to claim Gift Aid on the whole amount you have paid, and you can reclaim the extra tax on the entire sum via your tax returns.
For example, if a charity-run museum is charging a £10 entry fee, you would need to pay £11 for the charity to be able to class it as a donation and claim Gift Aid. That would mean the charity would receive £13.75, and a higher rate taxpayer could reclaim a further £2.75 through their tax return. Note that charities can't reclaim Gift Aid in certain situations for example, if the donation was made on behalf of somebody else, or made to a friend or family member working at an event where the charity contributed to their costs.
In the news this week...
Everyone hates stamp duty land tax (SDLT), says Zoe Dare Hall in The Daily Telegraph; from first-time buyers who can't save enough cash to pay it on top of their deposits; to buy-to-let investors who have been hit with a further 3% surcharge since last April. But there are ways to avoid it. Holiday lodges are exempt from SDLT because they are, in theory, mobile. Thankfully, with their "open-plan, interior-designed" living spaces, they no longer resemble "glorified caravans".
Properties under £125,000 are also exempt, as are houseboats (although watch out for ones sold with gardens, as they do attract SDLT, and remember to factor in mooring costs). Some buy-to-let investors are getting around paying it, too, by snapping up "totally SDLT-free opportunities" for under £40,000 in areas such as Burnley and Teesside, where yields are often "attractive".
Following a recent tax tribunal ruling, it may not be wise to rely on HMRC to do your tax calculations for you, says Vanessa Houlder in the Financial Times. A taxpayer lost a £3.1m dispute last week after a judge decided that HMRC could "challenge tax calculations that relied on its own algorithms".
The tribunal ruled that users of tax computation software could "not rely on its results", even although its technical specifications had been provided by HMRC. The judge justified his decision, saying that an adverse ruling would make HMRC "much more guarded about the assistance that it provides", disadvantaging taxpayers who cannot afford to pay "professional advisers to complete their returns".
The value of second mortgages being taken out has hit its highest level since 2008, as people seek extra cash to carry out "home improvements, pay off debts, or fund school fees", says Annabelle Williams in The Times. Second-charge mortgages provide a lump sum which is repaid alongside your existing mortgage over a fixed term.
The advantage is that you avoid having to re-mortgage, which may be uneconomical if you are on a good rate, have to pay "hefty" fees to do so, and are only looking for a small loan. The cheapest current deal is from Paragon Personal Finance, which charges 3.73%.
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Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings accounts and credit cards to pensions, property and pet insurance.
Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.
Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping, among many other titles both online and offline.
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