Gift Aid

Tall Rich has published rather a good, fairly simple, guide to the way that Gift Aid works. I say"simple"...

Nothing is simple in the world of tax, which is why there are always loopholes. The previous Government more or less quadrupled tax legislation, introduced tax "allowances" for working families which effectively brought benefits into HMRC, and left as many loopholes as there were before.

But the way in which Gift Aid works for higher-rate (ie over about £43K) taxpayers works is fascinating. The Government has spun it as if it means that these people are taking home more money as a result of giving to Charity. They're not, as Richard's sums show. They're taking home less. The Charity gets all the real benefit. But the thing that irks Little George is that the Government loses out. There's lots of good reasons to give to Charity. One reason is that you really approve of the cause - be it a church, foreign aid, saving confused dolphins, or giving holidays to orphans. Another is that you may think charities are less prone to inefficiency, political interference and general gormlessness than the Government. You may well have a point.

Or you may have bought into the Government's rhetoric of "The Big Society", and decided that if the State needs to pull in its horns after years of quite palpable and enormous waste, then you'll allocate money to those that the Government is hoping will take up the slack - the people that care in the voluntary sector for the homeless, the less able, the old. Well if you did April Fool. The Government want you to support the voluntary sector - and they want your money for themselves as well.

Have you thought of investing in some kind of offshore trust? I hear they're quite popular among some.