IN this month's article Jonathan Staples, partner at Horsfield & Smith, chartered accountants and business advisors looks at: GIVING TO CHARITY

Gift Aid Gift Aid is the main vehicle for tax efficient giving to charities. It applies to any donation whether large or small, regular or one-off.

Simply by confirming that they are taxpayers, donors can ensure that their chosen charities can reclaim the basic rate of income tax on all their donations, equal to 28 per cent of the amount donated. This confirmation has only to be completed once for each charity and remains valid for as long as the donor remains a taxpayer.

As an added boost for donors, higher rate taxpayers can claim for themselves the difference between basic and higher rates of tax (currently 18 per cent) against their own income tax or capital gains tax liabilities, reducing further the net cost of the donation.

This relief may be carried back to reduce the tax payable for the previous tax year.

A gift worth £1,282.05 to the charity could cost you as little as £769.23.

CAF CharityCard Account This is a very flexible scheme organised by CAF (Charities Aid Foundation). You can open an account with as little as £10 a month or with a single payment of £100.

The "account" is in effect a "charity cheque book and debit card" and can be used to make donations easily - by phone, by post or online - to your favourite charities.

Tax is recovered at the basic rate and added to your account.

As with Gift Aid, higher rate taxpayers can reclaim the difference between the basic and higher rates of tax. Because CAF deduct four per cent for running most accounts, a £100 donation to CAF equals £123.08 to donate to chosen charities.

Payroll Giving This scheme allows you to make gross donations to charity (deducted from salary before tax is calculated). There is no statutory minimum or maximum limit, although individual schemes may impose a lower monthly donation limit. As an employer it's low, or no, cost to you.

Since the Payroll Giving agency does most of the administration, any costs you might incur are minimal and are likely to be absorbed in your existing payroll costs. Plus any costs incurred running a scheme are allowed as a deduction against profits.

Internal publicity Running a Payroll Giving scheme is good for your business because it shows that you care about your staff and the community - helping to build better employer-employee relations.

Tax refunds Self-assessment taxpayers may nominate a charity to receive all or a specified amount of an anticipated tax repayment. The donation will be passed direct to the charity by HM Revenue & Customs, once the tax return or claim is processed.

Gifts in kind Gifts of certain shares and securities, lands and buildings to a charity attract income tax relief as well as capital gains tax (CGT) relief.

There is a similar corporation tax relief for gifts by companies.

l Professional advice should always be sought as individual circumstances may differ.

Jonathan can be contacted on(0161) 761 5231 or jonathans@horsfield-smith.co.uk