Tax efficient giving

Gift Aid

The Orchestra of the Age of Enlightenment is a charity.  This means that if you are a UK tax payer and you make a donation to the Orchestra, including supporting us through our Benefactor, Chair Patron or Friends schemes, the orchestra can claim back from HMRC the basic rate tax you have paid.

Put simply, this means that, if you are a UK tax payer, for every £1 you donate to the OAE, the donation is worth £1.25 to the Orchestra.

Better still, if you are a 40% or 50% tax payer, you can also claim personal tax relief on the difference between the basic rate (currently 20%) and the applicable rate of income tax through your self assessment tax return or by using a P810 form.

This means, currently, that if you make a donation of £800, it will be worth £1,000 to the OAE (including Gift Aid) while costing you only £500 after personal tax relief if you are a 50% tax payer or £600 if you are a 40% tax payer.

Gifts of Shares

A gift of shares could be a way of making a donation to the OAE.

If you are a higher or additional rate tax payer and you own shares or units of an authorised unit trust which show a capital gain, a gift of shares or units to the OAE could cost you well under 50% of its eventual value to us: the gross value of a gift of shares to the OAE can be offset against your taxable income, and no capital gains tax is payable on those shares.

Example

Your marginal tax rate is 40%. You own shares worth £1,000 with a cost of £500. You have already used up all your capital gains tax allowance this year. If you sold the shares to use the proceeds for your own purpose the amount available after payment of capital gains tax of £140 (28% of £500) would be £860.

If you opted to make a gift of these shares to the OAE, then the OAE would sell the shares and, as a charity, no capital gains applies, so the gift amounts to £1,000 (less dealing costs).

At the end of the tax year you are able to offset the gross sum of £1,000 against your income tax liability and you will receive a rebate of £400. Thus you have made a gift which is worth in the hands of the charity £1,000, but which has cost you only £600.   If your marginal tax rate is 50%, the cost of the £1,000 gift would be just £500.  In both instances, in addition, you have  saved yourself the £140 capital gains charge, in comparison with selling the shares.

For more information on Gifts of Shares: contact isabelle.tawil@oae.co.uk, or call Isabelle Tawil on 020 7239 9380