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ARTICLE · 31 JANUARY 2022

Double-Bubble Gift Aid: Its Availability And Its Limitations

Berg Kaprow Lewis
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Tax law encourages donations to charity. Where the qualifying conditions (which are not very onerous) are fulfilled and the relevant paperwork signed, not only is your monetary donation topped up by 25%...

United KingdomTax
Geraint Jones
Geraint Jones

Tax law encourages donations to charity. Where the qualifying conditions (which are not very onerous) are fulfilled and the relevant paperwork signed, not only is your monetary donation topped up by 25% by the Government; the donation also serves to reduce the amount of any higher-rate or additional-rate Income Tax you pay.

Even better reliefs potentially apply where the donation is in the form of a 'qualifying investment' rather than in cash. In such cases, not only do you deduct the value of the donation in working out your taxable income (so that you obtain tax relief at your highest rate of tax); you also are absolved from paying Capital Gains Tax ('CGT') on the disposal. Thus, it will normally be more tax-efficient to give the asset to the charity than to sell the asset, pay CGT and gift the net proceeds.

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