Clients, professional advisers, fundraisers and guests attended a charitable giving with tax consideration seminar this month at Donnington Valley Country Club. It was co-hosted with local philanthropy group Berkshire Community Foundation, accountancy practice Ross Brooke and law firm Gardner Leader.

Berkshire Community Foundation

The incoming Chief Operating Officer of Berkshire Community Foundation (BCF), Jon Yates described how BCF works with professional advisers, notably accountants, solicitors and financial advisers to help corporate fund-raising initiatives. The motto,” Think global, think local and give local” reflects BCF’s remit to provide advice, distribute grants and raise the profile of local charities and communitygroups addressing identified need across Berkshire, as well as to inspire philanthropy and charitable giving.

Over £1m had been distributed to some 224 charities in 2018, Jon said as he showed a video of the Electric Eels Down’s Syndrome synchronised swimming team, which recently came fourth in the world championships. BCF funds rehabilitation of those involved with gun crime, and highlights the disturbing fact that there are some 2,600 victims of modern slavery in the county.

Jon explained the key role professional advisers have in philanthropy and that the tax breaks available to philanthropists really benefit the charities BCF supports. Indeed, BCF’s Business Philanthropy Club provides the structure for clients of professional advisers who wish to give. He added that there was a lot of money in dormant or inactive trusts that could be used to support needy groups. An example is the Stevens Family Fund established to support the widows and orphans of the workers of the Reading biscuit tin factory, a key supplier to the Huntley and Palmers biscuit factory, which closed some decades ago. As there are no widows nor orphans of the factory left, the trustees of the fund were delighted that the remaining £154,000 held in trust has now gone to the deprived of Reading.

Tax-subsidised charitable giving

Phil Kinzett- Evans, Newbury-based tax partner of accountants Ross Brooke, outlined the benefits to donors of tax-subsidised giving, explained gift aid and gave examples of basic, higher and upper rate tax payers. Phil also talked through how tax liabilities could be mitigated whilst making charitable donations, as well as explaining the rules on carry back and how corporation tax can be mitigated on corporate charitable donations. Pay roll giving or give as you earn (GAYE) is another area that benefits both the donor in terms of tax mitigation as well as the charity, concluded Mr. Kinzett- Evans.

The Financial Adviser’s view

Andy Coles, one of our Senior Financial Advisers, who is also a Chartered Financial Planner, is a firm believer in educating clients about the benefits of charitable giving during their lifetime, rather than after death. But before contemplating supporting a charity close to one’s heart, clients must consider the need to plan for emergency expenses, school fees and care home costs in the future, as well as day to day and one-off spending in retirement. Andy said that clients need to know what they can really afford to gift. Having gone through all income and expenditure Andy can put together a life plan that maintains a necessary level of income for a long retirement as well as to have the cash flow to support a charity gifting plan. Many clients appreciate seeing the benefit of their donations and the impact they have during their lifetimes; but it is important to know how and when to make a gift for the benefit of both philanthropist and beneficiary.

Mitigating Inheritance Tax AND boosting charitable donations

Concluding proceedings, Penny Wright, Partner in the Inheritance Protection Team at law firm, Gardner Leader and a specialist in philanthropy and charity law, explained how leaving 10% to charity reduces higher rate inheritance tax (IHT) from 40% to 36%. It is important to structure a gift to charity to mitigate IHT and boost donations and Penny gave an example of how £100,000 can be saved on a £2.5 million estate. Penny also explained the pros and cons of setting up a new charity for a special cause or finding an existing one which will fulfil the terms of a bequest.