Christmas is a time for (rethinking your) giving...
Please find below an interesting blog from my colleague Cathy Corns who writes for our sister blog SME Plus Blog...
You may well recall that the Chancellor announced some changes to personal tax from April next year, the main one being the reduction in the basic rate from 22% to 20%. Whilst the latter may seem to be nothing but good news there is unfortunately a knock-on effect on charities. At present if you are a higher rate taxpayer and give £100 to a charity it can reclaim basic rate tax at 22/78 increasing the value of your gift to £128 in its hands. The cost to you, after higher rate tax relief, will reduce to £77.
After April next year however, the same gift will produce income for the charity of only £125 at a cost to you of £75. Whilst this may not sound significant – the overall impact on some charities of a loss of 2% of all gift aid income could be considerable.
If you want to maintain the status quo for the charity you need to increase your gift to £102, this will generate income for the charity of £128 at a cost to you of £77 – exactly as before.
