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Giving to charity: how to donate a little bit more
If you want to donate to charity over Christmas, there are things you can do to maximise your generosity, says Ruth Jackson.
Set aside the shopping and the feasting Christmas is also the season of goodwill. December is the peak month for charitable donations, notes Lucy Warwick-Ching in the Financial Times. Just make sure you're aware of how best to support good causes over Christmas.
If you're keen to send out charity cards, note that some set-ups are more generous than others. Cards from high-street stores often give a pitiful donation to charity. For example, Sainsbury's contributes just 10% of the purchase price on its charity cards. Buy your cards directly from a charity, or from Cards for Good Causes, and up to 100% of the profit goes to charity.
Next, consider donating your cashback. You could put your Christmas shopping on a charity credit card, which means you donate as you spend, but the donation is tiny typically 25p for every £100 you spend. If you want to maximise the donation, just get a standard cashback credit card the Amex Platinum Everyday card pays 5% in the first three months, then up to 1% after that and donate the cashback to your chosen charity.
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You could also use a charity cashback website to donate while you shop online. Set up an account with Easyfundraising or Give as you Live, then click through to the sites you want to shop at from there. The website will track your spending, diverting cashback to charity, says Holly Black in the Daily Mail. This usually comes to 1% to 10% of purchases. You could also give year-round via Give as you Earn, whereby you donate directly from your monthly salary, before tax is deducted.
You can also donate shares listed on a recognised stock exchange to a charity, says Warwick-Ching. Donors get full tax relief on any capital gains tax (CGT) due so if you've made a profit you won't be taxed on the transfer. You can also claim income-tax relief on the market value of the shares (so a 40% taxpayer gifting £10,000 in shares would cut their income tax liability by £4,000). Alternatively, gifts of land and property are exempt from CGT and inheritance tax, and income-tax relief can also be claimed on the value. "The charity may ask you to sell these assets and give them the proceeds, but as long as you keep records of this request and your subsequent donation, you won't have to pay CGT," says Sarah Coles of broker Hargreaves Lansdown.
Giving Gift Aid
When you give to charity, you'll be asked to sign a Gift-Aid declaration. This allows the charity to reclaim the basic-rate tax you have already paid on the donation so a £1 donation will become £1.25 for the charity.
Gift Aid is also available on non-cash gifts. If you drop items at a charity shop and agree to Gift Aid them, then the charity shop can add this to whatever they make from the sale of your donations. You can also often Gift Aid entry fees to attractions if part of the fee is going to charity.
If you are a higher- or additional-rate taxpayer, you can then reclaim the rest of the income tax paid on any donations when you file your tax return, and donate that money to charity too.
It all sounds very worthwhile. But before you sign, remember every penny of tax you pay to a charity via Gift Aid is a penny that does not go to HM Revenue & Customs to pay for public services. In the 2017/18 tax year, £1.2bn went to charities in this way with few limits placed on the bodies that qualify as charities and little regulation on existing ones. Read more on this at MoneyWeek.com but at least be aware that if you do Gift Aid, it's not "free money" it's cash that you've diverted from collective public services to a specific cause you happen to favour.
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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.
