Daily Mail questions we can answer

Why don\’t Britain\’s rich give to charity like wealthy Americans?

1) Because Brits are taxed more heavily than Yanks

2) Because septics get tax breaks on their donations and Brits don\’t.

8 thoughts on “Daily Mail questions we can answer”

  1. I thought the Gift Aid went to the charity, rather than back to the taxpayer as in The States. I may be wrong about that, though.

  2. So Much For Subtlety

    There are cultural issues too. Britain’s cultural weather is, or used to be, made by inherited wealth, not by the newly wealthy.

    Britain’s inherited wealthy are wealthy because they hold on to their money with an iron fist. Not because they are making money. They are also wealthy because they avoid the attention of socialist envy and so they tend to be quietly wealthy.

    America’s most famous wealthiest people are wealthy because they made a lot of money. They tend to believe in the system and so think their children will be able to make it too. They are not ashamed of it. They like conspicuously displaying their wealth by public charity.

  3. We certainly do get tax breaks.

    I’ve stopped giving to charity in the UK because it’s the government’s job to sort out the problems: I’ve paid my tax, so I’m not going to buy my hospital another scanner. And that’s the attitude that explains the difference.

    Tim adds: Ah, but the tax breaks are very different indeed. In the UK the tax that would have been paid, or has been paid, gets added to the gift.

    In the US the gift gets knocked off the tax bill.

  4. In the UK the tax that would have been paid, or has been paid, gets added to the gift.

    In the US the gift gets knocked off the tax bill.

    Apart from the fact that there is very little practical difference for large gifts – you size the gift to take notice of the money the charity will actually receive, this isn’t quite correct.

    In the UK, you, the donor, can choose (although many people don’t). You can claim the all the tax back on your annual return or you can let the charity claim basic rate through Gift Aid and claim the rest yourself (if you are a higher rate tax payer.)

  5. “In the US the gift gets knocked off the tax bill.”

    I’m pretty sure it doesn’t: it gets knocked off the taxable income. Which is what happens in the UK too, unless you choose to use Gift Aid, whereby some tax gets refunded directly to the charity (purely as an administrative convenience for the majority who are basic rate tax payers and don’t fill in a self-assessment tax return).

  6. From April next year onwards, a basic rate taxpayer donates say £800 and the charity gets £200 back direct from HMRC if a gift aid declaration has been signed. 25% uplift. (I’m ignoring the current transitional relief arrangements which generate bigger benefits, but expire on 5 April 2011.)

    A higher rate taxpayer donates say £800, and the charity gets £200 from HMRC, as above and, in addition, claims back another £200 via annual tax return; net cost £600 to give £1,000 to the charity, 66% uplift.

    If you donate shares on which there is a cpaital gain, the benefits are even larger.

    What are the equivalent American incentives anyone?

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