Giving to charity needn’t be taxing

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Help your favourite charity whilst also helping yourself to at least 20 per cent tax relief and, if you’re earning £150,000 a year and making pension contributions, potentially saving an awful lot more.

 

A higher rate taxpayer can gift £80 to his or her favourite charity, which becomes £100 as the charity can reclaim basic rate tax relief through Gift Aid, and then the taxpayer can claim back the additional £20 paid in higher rate tax through his or her tax return.

 

More importantly for those earning above 150,000 a year, making a Gift Aid contribution could take earnings back below the £150,000 threshold meaning pension contributions could receive tax relief at 40 per cent as opposed to 20 per cent. This is potentially a very valuable financial planning tool that will not only benefit others but will also leave you with more money in your own pocket. 

 

 

A Cash ISA can be started at 16 (up to £3,600 p.a.) and a Stocks & Shares ISA at 18 (up to £7,200 p.a.). From next April you can move it up to £5,100 p.a. into a Cash ISA or £10,200 into a Stocks & Shares ISA. 

 

If you’re a grandparent who’s concerned about inheritance tax it might be possible to gift normal out of income monies into an ISA or a Bare Trust for your grandchild. These monies could then be exempt from inheritance tax as well as being in a tax efficient investment for your grandchild.

 

See which cash ISAs are paying the best rates.