Tax-Efficient Ways of Giving
UK Taxpayers
LAMDA is registered as an exempt charity in the UK (Registered Charity number 312821), which can allow UK taxpayers to make efficient gifts through a number of different ways. In particular, if the sum of the taxpayer’s total donations does not exceed the amount paid in income tax, it is possible to increase the value of the donation while reducing the tax liability at the same time.
Regular Giving
For this method of giving a commitment is undertaken to make annual, quarterly or monthly payments for an agreed number of years or until further notice, normally by standing order. Completion of a Gift Aid Donation Form by a UK taxpayer allows LAMDA to reclaim a sum equal to the basic rate of income tax. Higher rate taxpayers can also reclaim the difference between the basic (22%) and higher (40%) rate bands. For example £1,000 per annum pledged for five years will bring £6,410 to the Academy and only cost the higher rate taxpayer £3,864.
One-off Gifts
A cash gift of any value can be made by cheque, credit card or bank transfer. As with regular giving, the completion of a Gift Aid Donation Form allows LAMDA to reclaim basic rate tax and a higher rate taxpayer to reclaim the difference between basic and higher rate taxes. For example a one-off gift of £10,000 will bring £12,820 to LAMDA but only cost a higher rate taxpayer £7,692.
Donating Shares or Securities
This is one of the most attractive methods of minimising Income and Capital Gains Tax (CGT) liability to the donor while maximising the benefit to LAMDA. Shares listed or dealt on a recognised stock exchange (UK or foreign), units in authorised unit trusts (and similar foreign collective investments) and shares in OEICs (Open-Ended Investment Companies) are eligible. Not only are donated shares free of CGT, the market value can now be off-set against Income Tax liability. For a higher-rate taxpayer whose CGT annual exemption has already been used up for the year, the incentives are enormous, particularly if the value of these shares is substantially greater than at acquisition. For example, donating shares originally purchased for £10,000 and which are now worth £25,000 will bring £25,000 to LAMDA, but the donor will receive Income Tax relief of up to 40% of £25,000 (i.e. £10,000). In addition, by donating stocks to LAMDA rather than selling to fund a cash donation, the donor also saves on the gain – up to 40% of £15,000 (CGT of £6,000). The true cost of the £25,000 donation in this example is therefore just £9,000 to the donor.
Payroll Giving – “Give As You Earn”
For donors whose employers operate a payroll giving scheme, any donation to LAMDA is automatically, deducted from an individual’s gross salary before tax is paid. The benefits are two fold: higher rate taxpayers need not remember to reclaim relief through self-assessment, and the donation costs the donor less, as it is taken out of pre-tax earnings. For example if you give £25.00 per month, LAMDA receives £27.50 (costing a basic rate tax payer £19.50 and a higher rate tax payer £15). Corporate matched giving programmes are also a very favourable way in which to further increase the ultimate value of a gift to LAMDA.
Corporate Giving
It is now easier for Companies to reclaim the Corporation Tax on gifts to charities, making it easier for Corporate Gifts. The company or unincorporated association simply pays a gross figure to LAMDA and claims tax relief when calculating Corporation Tax. No further tax reclaim by LAMDA is then required.
Bequests
As an exempt charity, LAMDA pays no tax on gifts of money or property bequeathed by a legacy. In addition, a bequest to LAMDA may have tax benefits for your estate by reducing the amount liable for Inheritance Tax. (Normally the excess over £263,000 in 2004/2005.) Click here to read more about leaving a legacy to LAMDA.
Transfer of Assets / Gifts “In-kind”
A gift of a capital asset such as a work of art, a collection or other property can be made to LAMDA without any Capital Gains or Inheritance Tax Liability being incurred. In addition, no tax would be payable by LAMDA if the value of the asset was subsequently realised.
Donations in-kind of all sorts of things, including musical, office or other relevant equipment, can all be very helpful to the school, and can be discussed on a case-by-case basis.
Please contact LAMDA's Development Office for further details on any of the above information.