Top tips for gifting well this Christmas without giving it all to HMRC

Inheritance tax: Expert provides tips on avoiding hefty bill

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With Christmas fast approaching, some people will be considering giving gifts not just to family members, but potentially to charities as well. Britons could do more to maximise the impact of charitable gifting, without giving it all to the taxman according to Andrew Evans, philanthropy adviser at Equilibrium Financial Planning. He shared his top tips for gifting well this festive season. 

While Christmas may be a good time for giving, kindhearted Britons are being reminded to make use of all the tax breaks available to them.

When it comes to not giving all one’s money to HMRC, experts are reminding taxpayers to opt for gift aid when gifting to charities this Christmas.

At the same time, it’s not uncommon for people to make a donation in their will so they their loved ones can avoid paying inheritance tax.

Giving money to charity in a will could reduce the amount of tax paid by the rest of your estate so one’s family can get the most out of their inheritance.

Mr Evans said it’s important to plan ahead when giving to charity and identify where someone’s money is likely to have the greatest impact.

He explained: “If you’re unsure of how to narrow down your areas of interest, think about what you want to achieve through giving and identify your objectives.

“You could also consider working with a philanthropy adviser who will help you to identify charities that align with your passions, interests and goals.

Once you have compiled a list of organisations or causes that you’d like to support, take some time to do your research. This should include elements such as ensuring the organisation has a Charity Registration number.”

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He continued: “If it does you can visit the Charity Commission’s website to find out information such as who the charity’s trustees are, how much senior staff are paid and their published accounts.”

However, the expert said smaller or newer charities may be just as worthy causes and shouldn’t be automatically overlooked.

It’s also worth considering a Donor Advised Fund (DAF) – a charity that distributes funds in accordance with the wishes of those who make donations.

He explained: “It’s simpler than setting up your own charitable foundation and allows you to plan donations over a prolonged period.”


While the money doesn’t have to be donated straight away and can be invested by the DAF for capital growth or income, it does attract relevant tax relief immediately.

It’s important to be aware of the benefits that gifting can provide.

Charitable giving facilitates a range of tax benefits, including those related to inheritance tax.

Mr Evans explained: “Given the continued freeze of allowances, this is a consideration that is becoming relevant to an increasing number of households in the UK.”

He continued: “This is because when you give money to charity your taxable income is reduced by the amount you chose to gift.

“For those earning between £50,000 – £60,000 or over £100,000, a charitable donation may mean your income falls below the tax threshold, meaning that valuable benefits can be retained or reinstated.

“Gift Aid also has benefits for your tax bill, as well as for your chosen cause. For every £1 that you give, charities can claim 25p back from the government.

“If you are a higher-rate or additional-rate taxpayer, you can also claim back 20 or 25 percent of the donation respectively via a tax return.”

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