Donation – 4 Interesting Facts About Tax Charities
Tax relief – The significance of Tax Charities:
There are numerous individuals and companies out there, who regularly donate to charities. It is their way of giving back a share of their good fortune to the society. But how many of us know about tax charities deductions? Not many know that donations to certain organisations are tax deductible. Either the donor or the charity can claim tax deduction under various provisions of the law. In effect, you can donate to a good cause and at the same time save on your taxes as well.
However, there are a few interesting things you need to keep in mind for obtaining charities tax exempt on your donation.
Merely pledging to make a contribution cannot be considered under this exemption because tax charities require you to actually make the donation first. The government has specified the types of donations that will be considered for tax deductions. They are:
a. Donations under Gift Aid scheme: The organisation receiving donations under this scheme can claim an amount equal to the basic rate tax on the donation.
b. Donations directly from your salary: Make use of your employer’s payroll giving scheme wherein your donations will be made before the tax is deducted.
c. Donations through shares and property: If you own any share that is listed in a stock exchange, you can transfer it to a charity or even sell them and donate the amount to them directly. Similarly, if you donate your property to a charitable trust, it will be exempted from inheritance tax.
d. Donations through Will: Any charitable donations in your Will can reduce the inheritance tax by as much as 4% in some cases.
Not all donations can be tax exempt:
Before you make a donation, make sure the charity is a tax-exempt organisation. So how do you find qualified tax charities London, or tax charities Belfast? Well, you can always request to see their certificate to be sure. Alternatively, you can contact HM Revenue & Customs (HMRC) to obtain a list of qualified charities in your area.
Keep a record of your donations:
Most of us donate to charity, but how many of us keep records of the same? In the case of small and medium sized businesses that contribute to charity, maintaining such records is crucial for claiming tax deductions. When you file the charities tax returns, you need to show the HMRC details of your donations including a copy of the acknowledgement from the organisation.
The need for bookkeeping services:
Maintaining up-to-date records of every charitable donation made over the year can be a bit challenging. At the end of the financial year, when you file your tax returns, there is a good chance you may forget to include this crucial tax relief measure. This is where hiring a professional bookkeeping service provider can come to your rescue. In addition to maintaining proper records, they can help you earn some tax relief through timely filing of charity donations.