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.

927_MW_P22_Per-Fin-Main
Which charity Christmas cards are best?

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.

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.

If you're thinking big

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.

Recommended

I wish I knew what negative interest rates were, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what negative interest rates were, but I’m too embarrassed to ask

There’s been a lot of talk from the Bank of England recently about introducing “negative interest rates”. So what on earth are they, and what would th…
20 Oct 2020
Where to find the best insurance deals
Insurance

Where to find the best insurance deals

If you want a good deal on your home, contents or travel insurance, you will need to do more research in the post-Covid-19 world.
20 Oct 2020
Negative interest rates and the end of free bank accounts
Bank accounts

Negative interest rates and the end of free bank accounts

Negative interest rates are likely to mean the introduction of fees for current accounts and other banking products. But that might make the UK bankin…
19 Oct 2020
How to make your home greener with a government grant
Personal finance

How to make your home greener with a government grant

Cut the cost of making your house more environmentally friendly with a Green Home Grant.
13 Oct 2020

Most Popular

How will we repay our vast debt pile? Do we even need to?
Sponsored

How will we repay our vast debt pile? Do we even need to?

In his recent articles looking at different aspects of the fixed-income investing world, David Stevenson looked at inflation. Today he looks at a clos…
19 Oct 2020
Buying bitcoin could be the best way to play the remote working boom
Bitcoin

Buying bitcoin could be the best way to play the remote working boom

The coronavirus pandemic has accelerated the move to home working, flexible employment practices and the rise of the “digital nomad”. One of the best …
21 Oct 2020
Negative interest rates and the end of free bank accounts
Bank accounts

Negative interest rates and the end of free bank accounts

Negative interest rates are likely to mean the introduction of fees for current accounts and other banking products. But that might make the UK bankin…
19 Oct 2020