How to Use Charity for Investment Purposes
If you would like to give to charity in a tax-efficient way, you could consider joining forces with other investors in a fund launched in partnership with The Prince’s Trust, Invest & Give, to help generate a regular income to this charity. This way charities don’t have to rely on charity fundraising to make money
HM Revenue & Customs has approved a scheme whereby 0.6pc of the value of the fund will be paid to The Prince’s Trust each year and attract tax relief through Gift Aid. If the fund reaches its target of £100m, the 0.6pc which will go to the charity - £600,000 - would be boosted to £768,000 to include 20pc tax already paid on income by investors.
Invest & Give, which launched last month, is a balanced managed fund investing across a spread of assets.
To use this scheme, anyone giving money has to sign a Gift Aid declaration form and the charity can reclaim the income tax, plus some additional “transitional relief”. Essentially, if you donate £1, the charity collects £1.28. This transitional relief will last until April 2011, after which charities will receive just 25p for every £1 given, which is the amount of basic-rate tax paid on this sum.
Non-taxpayers cannot use this scheme, as they haven’t paid any tax on the money donated to charity. But higher-rate taxpayers can also claim back the difference between the basic-rate and higher-rate tax. A charity receiving a £100 donation through Gift Aid would be able to claim a total of £128.20, and if this was made by a higher-rate taxpayer they could claim a further £25 through their tax return.
It is possible to backdate donations for up to six years.
