Warren Shute is a multi award-winning Chartered Financial Planner, Certified Coach, author of The Money Plan, and Sunday Mirror columnist
When I turn on the news, or I read the headlines, I can see why it is easy for people to be shocked and worried by the economy and global tension with fighting in Ukraine and the Middle East.
This is why we must stand guard at the entrance of our mind, to watch what we allow in. Our minds are brilliant at taking information in and generalising it, which makes us feel that it is all directly impacting me.
The struggles globally, the aftermath of the pandemic, and the cost-of-living crisis have put additional pressure on charities, as more people reach out for support.
Charities around the world were slowly recovering from the effects of the pandemic, and then they were hit from both sides by the cost of living crisis: donations have reduced as people tightened their spending to balance their budgets, and the numbers in need have increased as more people fall on harder times and struggle to recover as rising energy prices make life even more difficult.
If you rarely or never give to charity, it can seem an odd thing to consider. “Charity begins at home” is a response I often hear when I discuss this, but helping others can be a rewarding act, whether you give with your time, as so many have over the last few years, or your money. I think we should all do what we can.
When you support a charity with a donation, there are Government financial benefits for you too.
Many donations to charities include the option of Gift Aid, so that effectively for every £1 you give to a charity, it can claim the basic rate of income tax on your donation, making it worth an extra 25%.
If you’ve ever donated via text message, you may recall receiving the “opt-in to Gift Aid” replies. If you are a higher or additional rate taxpayer, you should claim the higher or additional rate of income tax via your self-assessment, or by asking HMRC to amend your tax code.
This means you can claim further tax relief if you pay more tax. It is important to note that because the charity is receiving tax relief on your donation, you must have paid tax to the level you are claiming for it to be allowable.
Some employers run a Payroll Giving scheme, which means your charity donations come straight out of your gross income, saving you tax immediately with no claim required.
For some the thought of making a monthly donation is impossible, but there are other ways you can help a charity.
You can leave money to a registered charity in your will, and any payment will be made free of inheritance tax. This donation can also reduce inheritance tax due: if you gift 10% or more of your taxable estate to a charity, the rate of inheritance tax chargeable on your estate is reduced from 40% to 36%.
This is particularly beneficial if you would like to give to a charity but are unable to afford monthly donations; or if your estate is subject to inheritance tax.
In Winston Churchill’s words: “We make a living by what we get, but we make a life by what we give.”
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