Other tax effective issues:

Payroll giving /
Giving of shares and securities

See here for Payroll giving, and below for Giving of shares and securities

Payroll Giving

A number of employers make it possible for employees to give to charity (including the church) via a payroll giving scheme (known as Give As You Earn to those who, for example, use the Charities Aid Foundation to process their donations). Employees give from their pay before tax is deducted. From April 2000, this scheme was enhanced as follows:

• The Government planned to advertise the scheme to make it more widely known.
• The maximum limit of £1,200 a year for donations through Payroll Giving was removed. People can now give as much as they like under the scheme.
• To encourage this method of giving the Government increased the gross value of the gift under Payroll Giving by 10% for three years from April 2000 to April 2003
• Regulations require the agency to pay the money to the charity within 60 days.

For example:

• If a donor gives £100 to a church through Gift Aid the church can recover the tax paid which, at the basic rate of 22% from April 2000, increases the value of the gift to £128.21.
• If a donor gives by Payroll Giving, the gift is made gross and the donor’s tax bill is reduced by tax at their highest rate. If the donor gives £128.21, the cost will be £100 to them at the basic rate and only £76.93 if they are a higher rate taxpayer. The church will receive only £121.80 because £6.41 (eg 5%) is retained by the agency as a levy for operating the scheme.
• Between 06/04/2000 and 05/04/2003, the Government increased the gross value of the donation by 10% – i.e. a further £12.82.
• So a higher rate taxpayer will have given £76.93 after tax and the church received £134.62!

The problems with encouraging use of the scheme do not alter, however:

• The donor needs to ensure the amount they choose to give includes the tax which would be ordinarily be claimed back by the church under Gift Aid. Not every donor will understand this.
• The forms have to be completed at the workplace and not in the presence of the charity – so some are never completed.
• The charity has no proof that the forms have been completed until notified by the agency (with a Declaration the church sees the completed form).
• The full value of the gift does not reach the charity as the agency takes a levy – usually 5%.

Until April 2003, the church benefited from donors who use the scheme correctly, while the government added its 10%. After that however, the church benefits more from Gift Aid, as the payroll giving agency charge will not apply.

Giving of Shares and Securities

Since April 2000, individuals have been able to get tax relief on gifts to charity of certain shares, securities and other investments. The donor can get income tax relief, in addition to capital gains tax relief, on gifts of shares to charity.

Whilst there is no additional benefit to the charity, except for the receipt of the shares or value of the shares, we need to make donors aware of this method of giving, and of the considerable value to them, particularly if they are higher rate tax payers. This method of giving can be particularly effective in Capital Fundraising, when the church can sell the shares when they need the funds, or when the market is favourable. Further details can be found on the HMRC website under “Giving land, buildings, shares and securities to charity”. The Giving Campaign also produced leaflets for both for the charity and the donor.