As a high-net-worth individual (HNWI), your financial decisions not only shape your legacy but also offer opportunities for tax efficiency. One such avenue is charitable giving, which can provide significant tax benefits while supporting causes close to your heart. CBM UK, a charity dedicated to transforming the lives of people with disabilities in the world’s poorest communities, offers impactful and life-changing programmes that may align well with your philanthropic goals.
Unlocking Tax Efficiency Through Charitable Giving: A Guide for High-Net-Worth Individuals and Corporations Supporting CBM UK
Posted on:
Wednesday, January 1st, 2025
Donating to charities like CBM UK can lead to various tax advantages:
Income Tax Relief via Gift Aid
How It Works: Gift Aid allows charities to reclaim 25p for every £1 donated if the donor is a taxpayer. Higher-rate (40%) and additional-rate (45%) taxpayers can claim back the difference between the basic rate (20%) and the higher rate, increasing tax relief: Reference
Benefit: Reduces taxable income, lowering tax bills, especially for higher-rate taxpayers.
Inheritance Tax (IHT) Reduction
How It Works: Donations made in a will are exempt from IHT. If 10% or more of an estate is left to charity, the IHT rate on the remaining estate can be reduced from 40% to 36%: Reference
Benefit: Reduces the value of the estate for IHT, offering tax savings while supporting a cause.
Capital Gains Tax (CGT) Relief
How It Works: Donating appreciated assets like stocks or property to charity avoids CGT on the increase in value. The charity can sell the asset tax-free, and you’re exempt from CGT: Reference
Benefit: Avoid CGT and claim tax relief on the full market value of the asset.
Payroll Giving for Corporates
How It Works: Employees can donate directly from their gross salary before tax, reducing taxable income. Companies benefit from tax deductions and can match employee contributions as tax-deductible expenses: Reference
Benefit: Employees get immediate tax relief, and companies enhance their CSR while lowering tax liabilities.
Supporting CBM UK
CBM UK is committed to ending the cycle of poverty and disability. Drawing on over 100 years’ experience, we work with the most marginalised in society to break the cycle of poverty and disability.
In the past year, tax giving initiatives like the above have contributed to:
- 658,634 people treated for blinding diseases
- 8,751 local health workers trained
- 5,002 children supported to access education
- 698 people reached by humanitarian assistance
These efforts are made possible through the generosity of donors who recognise the profound impact of their contributions.
Considerations for Charitable Giving
While the tax benefits of charitable donations are substantial, it’s essential to approach giving thoughtfully:
- Professional Guidance: Consulting with financial advisors or tax professionals ensures that your charitable contributions align with your financial strategy and maximise tax efficiency.
- Aligning with Personal Values: Selecting charities that resonate with your personal values enhances the fulfilment derived from giving and ensures your support drives meaningful change.
- Understanding Legal Frameworks: Staying informed about current tax laws and regulations helps you navigate the complexities of charitable giving and optimise the benefits for both you and the recipients.
Conclusion: The Power of Strategic Charitable Giving
Charitable giving stands as a powerful tool for HNWIs to achieve tax efficiency while making a lasting positive impact. Supporting organisations like CBM UK not only furthers vital causes but also offers tangible financial benefits. By leveraging available tax reliefs and aligning your contributions with your values, you can enhance your philanthropic efforts and secure a legacy of meaningful change.
Interested in Learning More About CBM UK and How Your Donations Can Make a Difference?
If you’re ready to explore how your charitable contributions can help transform lives while maximising your tax efficiency, CBM UK is here with you every step of the way. Whether you’re looking to learn more about our mission, discuss your giving options, or discover how your support can make a lasting impact, we’d love to hear from you.
Contact us today at Philanthropy@cbmuk.org.uk to start a conversation about how you can be part of meaningful change. Together, we can create a future where people with disabilities in the world’s most vulnerable communities have the opportunity to live full and independent lives.
Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. Consult with qualified professionals to address your specific circumstances.
References:
The Times – Charitable Giving Trends
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