High earners plan to make bigger donations

This weekend's Financial Times makes for interesting reading. According to City financial advisers and wealth managers, high earners are planning to give more to charity this year as they seek to avoid paying the new high rates of income tax.  

Wealth managers are apparently advising their clients that donating to charities can help to manage both income and capital gains tax liabilities.

Gifting to charities will be attractive to people on incomes between £100,000 and £112,950 whose marginal income tax rate is now 60% and also those who expect to earn just over £150,000 this year and who would expect to pay the top 50% rate of income tax.

It would appear that community foundations are benefiting from this move as wealthy donors choose to give money locally. Other beneficiaries are high profile animal charities such as the Battersea Dogs and Cats Home.

The article goes on to say that most benefactors are still waiting until the end of the tax year to make a donation when it is clear what their income is and how much they therefore need to give to charity.