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Higher-Rate Payers

If you pay tax above the basic rate, you can claim the difference between the rate you pay and basic rate on your donation. It's the same if you live in Scotland. Do this either:

  • Through your Self Assessment tax return
  • By asking HM Revenue and Customs (HMRC) to amend your tax code
  • Example: You donate £100 to charity - they claim Gift Aid to make your donation £125. You pay 40% tax so you can personally claim back £25.00. (£125 x 20%).

Inheritance Tax

A case study

  1. Bob has 3 children and an estate which has a net worth of £2m
  2. By Donating 10% of his estate to charity, Bob can reduce his IHT rate from 40% to 36% on the rest of his estate
  3. As a result; for a cost of only £13.4k per child, the total amount donated to charity is £167.5k

Conclusion

Not only does the donated portion of the estate not incur IHT, but also the rest of the estate also enjoys a lower rate of tax

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