Make your donations go further: a guide to being efficient when giving

This is according to financial adviser Towry which found that 72 per cent of people are not considering donating to good causes from their estate. However, this doesn't make sound

financial sense as there are a number of potential benefits from doing so. One of the main ones is a substantial cut to your inheritance tax (IHT) bill. Under current rules, assets beyond

the IHT threshold - also known as the nil-rate band - are taxed at 40 per cent. The nil-rate band is currently set at £325,000 until the 2018-19 tax year. "There are two tax benefits

gained by leaving money to charity," says Kate Turner, head of advice policy at Towry. "Firstly, the money you leave is exempt from IHT. Secondly, if you leave at least 10 per cent

of your net estate to charity, then the IHT rate on your remaining estate will be cut from 40 per cent to 36 per cent." This policy has been in force since April 2012, and the

"net estate" is effectively what you leave minus IHT reliefs and the nil-rate band. With house prices continuing to climb, more families are getting drawn into the IHT net - making

effective planning more important than ever. HOW MUCH SHOULD YOU LEAVE? According to Towry, if you were already considering leaving more than 4 per cent of your estate to charity you may

wish to increase this to 10 per cent. "Not only would the charity you want to benefit be better off, but your family would be as well - due to the reduction in the IHT tax rate,"

says Turner. SO HOW EXACTLY DOES THIS WORK? If you had a net estate of £500,000 (after the £325,000 allowance) and left 4 per cent to charity, the charity would receive £20,000 and your

beneficiaries would receive £613,000, taking into account IHT and the gift that has been made. "Your beneficiaries would receive exactly the same amount if you increased your gift to 10

per cent - except the charity would now receive £50,000," says Turner. "This is because the savings on IHT have compensated for the increased amount you left to charity."

OTHER WAYS TO LEAVE MONEY ON YOUR DEATH Gifting via your will is not the only way of giving to charity at the end of your life; another option is to leave your surplus pension fund.

"Funds paid as a lump sum to charity are free of tax," says Turner. "By contrast, lump sums paid to your family could be subject to a 55 per cent tax charge - although

proposals were announced in the Budget to bring this figure down to the donor's marginal tax rate." In some cases, she adds, it may be more beneficial to use your pension fund to

make charitable gifts, even if the remainder of your estate is then subject to the full 40 per cent IHT rate. GIVING DURING YOUR LIFETIME As well as giving to charity when you die, you may

also want to give during your lifetime. In some cases, this may be a better option, as the charities gain earlier. You might also find this more personally rewarding, by seeing the benefits

of giving while you are alive. "The most effective way to donate, both from a tax perspective and in terms of cash-flow for the charity, is in your lifetime," says Chas

Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants (ACCA). "This is simply because the charity gets the money earlier." This is a view shared by

John Fletcher from Brewin Dolphin Wealth Management. "Giving to charity during your lifetime is certainly more efficient from an income tax perspective," he says. "And, of

course, any money given to charity will no longer be part of your estate for IHT purposes." PAYROLL GIVING Many employers now offer payroll schemes that allow you to donate from your

salary before you get taxed. One of the largest schemes is Give As You Earn, which is run by the Charities Aid Foundation (CAF). According to CAF, this scheme helps more than 3,000 companies

and 400,000 staff give nearly £80 million to charity each year. "Give As You Earn is an easy and tax-efficient way of giving money regularly to the good causes of your choice directly

from your pre-tax salary," says Fletcher. "For a basic-rate taxpayer, every pound you give costs you only 80p. This drops to 60p for a higher-rate taxpayer, and 55p for an

additional rate taxpayer." You can use this scheme to give to any UK charity. "Giving in this way has lots of benefits," says Fletcher. "Charities can plan their

activities sustainably, knowing they are getting regular donations, plus you are better able to keep track of what you are giving." As well as giving money out of your salary, you can

also make donations out of your pension. If you are interested in either type of scheme, it is worth having a chat with your employer or pension provider. OTHER OPTIONS? Charitable trust -

you can set up your own charitable trust and then make lump sum or regular gifts. Once again, you can receive income tax relief on the contributions. Note, however, that this may be more

appropriate for wealthier people. ? Share giving - you can gift shares to charity and receive income tax relief on the value of the shares - as well as an exemption from capital gains tax.

CHOOSING THE BEST WAY TO DONATE When it comes to deciding how best to give money to charity, the answer will depend on a number of different factors. This will include the size of the gift

and your tax position. If you need help deciding how to give to charity, either now or in the future, it may be worth seeking a professional opinion from an adviser. Try a site such as 

Unbiased.co.uk. If you are looking to leave money in your will, make use of sites such as RememberACharity.org.uk, an organisation set up to boost legacy income.