If you are subject to tax in both the UK and US, you now have the opportunity to give to Cambridge in America (UK) Ltd, a registered charity in England, and be simultaneously eligible for tax benefits in both countries.
How do donors benefit?
Although registered in the UK, the charity’s sole shareholder is Cambridge in America, a US charity. This structure enables those who are liable for both UK and US tax to obtain tax relief in both countries on the same contribution.
Giving to the charity will maximize the donor’s income tax charitable deductions available on both sides of the Atlantic.
Gifts left by Will to the charity will qualify both for relief from inheritance tax in the UK, and for an estate tax deduction in the US.
How can Cambridge in America (UK) Ltd. benefit under the Gift Aid scheme?
Making a cash donation using the Gift Aid scheme (where applicable) increases the amount of the gift by enabling the charity to reclaim the basic rate tax on the gift. Currently, for every £1 donated, the charity can claim an additional 25p from HM Revenue & Customs. This means that a £1,000 gift is worth £1,250 to the charity.
When can the Gift Aid scheme apply?
The Gift Aid Scheme will apply to a charitable gift of cash made by a UK taxpayer, if the total amount of that taxpayer’s income tax and/or capital gains tax liability in the year that gift is made is equal to or greater than the amount the charity will claim for the gift. Gifts of cash can be made by check or wire transfer. The UK tax year runs from April 6 to April 5. For more information, please consult your tax adviser or visit the HM Revenue & Customs website at www.hmrc.gov.uk/individuals/giving/gift-aid.htm.
How do I apply the Gift Aid scheme to my gift?
Complete a Gift Aid Declaration Form and include it with your gift payable to Cambridge in America (UK) Ltd. The charity will then apply to HM Revenue & Customs to claim a portion of the tax you have already paid and advise you of the amount collected. There is no limit to how often Gift Aid relief can be claimed; one gift declaration covers all current and future gifts to the charity.
What if I pay the higher tax rate?
If you pay the higher rate tax, you can claim the difference between the higher rate of tax (40 percent) and the basic rate of tax (20 percent) on the gross value of your donation. For example, if you donate £100, the gross value of your donation to the charity is £125, so you can claim back 20 percent of this (£25) for yourself. You can make this claim on your Self Assessment tax return.
Those who are due to pay tax at 50% on earnings above £150,000 from April 2010 will benefit from a higher tax relief.
For more information on Gift Aid qualifications, please visit the HM Revenue & Customs website, noted above.
Does a gift I make jointly with someone else qualify for Gift Aid?
Yes, but you must tell the charity how much is from each of you, and you each need to sign a separate Gift Aid form if the whole amount is to qualify.
What effect does this have on my US tax return?
The amount of the gift will be the cash that you give and may also include the amount of basic rate tax the charity has reclaimed. Each amount will be stated separately. The receipt will be issued for a US dollar amount based on the exchange rate current at the time you make the gift. Please note that you should not claim a foreign tax credit for the amount of UK basic rate tax that is subject to the Gift Aid scheme and reclaimed by the charity. Equally, you should not claim a foreign tax credit for the higher rate tax for which you claim a refund.
Which other gifts attract tax relief?
Capital assets standing at a gain can be given to the charity without being subject to US or UK tax on the gain.
Donors can obtain UK income tax relief in addition to capital gains tax relief on charitable gifts of certain quoted shares or land. The shares must fall into the definition of ‘qualifying investments’ to attract the additional tax relief, which includes any quoted shares or securities listed on a ‘recognized’ stock exchange.
In order for the shares to qualify for a US income tax deduction they must be publicly traded on a recognized exchange. As Cambridge in America qualifies as a publicly supported charity, you should receive a full US income tax deduction for the fair market value for the shares. For many other types of assets, although there will be no tax to pay on the gain, you will only receive a deduction for your basis in the asset.
What types of gifts are accepted by Cambridge in America (UK) Ltd?
The charity may only accept unrestricted gifts, but encourages donors to make recommendations as to allocations. Gifts by check, wire transfer, of stock/shares and of land are accepted.
What currency is accepted?
Pound sterling or US dollars.
What happens after I give?
The charity will send you a receipt letter of acknowledgment for your original gift, which you can use for UK tax purposes. The charity will collect the appropriate Gift Aid from HM Revenue & Customs. The charity periodically remits all monies received to the University of Cambridge and/or its Colleges, or towards related projects in accordance with the Board’s allocations. Cambridge in America will send a receipt letter noting the amount of the gift including the basic rate taxes converted into US dollars at the relevant exchange rate. This letter should be provided to your tax accountant or retained by you with your US tax papers.
Eileen Flood, Administrator
Cambridge in America (UK) Limited
19 Norcott Road
London N16 7EJ
Tel. 020 7502 2813
Cambridge in America (UK) Ltd. is a registered charity No. 1128757 – Registered as a company in England and Wales No. 6804777