If you’re working in a big company, chances are that they’ll have a payroll giving scheme, which lets you donate part of your salary to a named charity (or into a charity giving account such as CAF or Charities Trust, who provide you with charity vouchers which you can pass on to a charity of your choice).
Additionally, many large companies participate in matched and fundraiser matched giving, in which they’ll double the amount you donate or fund-raise for charity, up to a set limit each year.
How could my £75 donation turn into £1,000
The headline title admittedly requires quite a unique circumstance: if you’re a higher rate taxpayer whose employer participates in a matched giving scheme, and you’re donating funds to someone who works at a company who matches fundraising donations, to a charity that’s part of the UK Aid Match scheme, your donation would be doubled three times, resulting in that £1,000 headline figure.
You start by donating £125 through your matched giving scheme. As a 40% taxpayer, this is the equivalent of donating £75 after tax.
Your employer then matches this £125, giving you a £250 donation which you pass on to the fundraiser. They then apply for another £250 from their own employer, making a total donation of £500. This total donation is then matched by the UK Government as part of the UK Aid Match scheme, making a grand total of £1,000 for that charity.
At the time of writing the only participant in the UK Aid Match scheme is Opportunity International UK – City AM Christmas Appeal 2012, but there should be more charities later in the year – Sport Relief was just one of the many charities supported last year.
Your everyday donations probably won’t be matched this many times, but there’s still some financial advantages in giving to charity via payroll giving rather than claiming gift aid later, particularly if your company participates in matched giving.
How does this compare Gift Aid?
If you’re a 40% higher rate tax payer, Gift Aid will only cover the basic rate of income tax of 20%. In order to claim the difference, you’ll need to send in the details on your tax return, or tax review form if you don’t normally fill in an annual return.
Additionally, most employers won’t match the gift aid element of your donation.
What if my company doesn’t participate in Matched Giving or Payroll Giving?
If you’re a lower rate tax payer, simply complete a gift aid form with your donation. If you’re paying 40%, you’ll need to send in the details on your tax return, or tax review form if you don’t normally fill in an annual return to claim your money back.
Can I donate to fundraisers using online donation sites such as Just Giving or Virgin Giving?
No. You can send the fundraiser the charity voucher directly, and they should be able to add this to an “offline” donated amount.