A charitable trust is often a better way of gifting to charity than making absolute gifts, because the trust provides greater flexibility for the Settlor, the person who creates the trust, to ensure that assets are used exactly for the purposes intended, which can include benefiting the local community and avoiding wastage.
A charitable trust can be established during your lifetime, or by your Will. When establishing the trust you direct the charitable purposes for which the funds are to be used and in addition you can draft a letter of wishes. This letter will be used by the trustees of your charitable trust to establish exactly how you wish funds to be applied.
In addition to the benefits of specifying exactly how a grant made to a charity is to be used, there are also tax advantages. With donations to UK charities any payment of income made by you or any other donor into a charitable trust can be used to reduce liability to higher rate tax. In addition GiftAid can be reclaimed by the trust where the donor is a UK taxpayer. Charitable Trusts are also exempt from income tax on investment income, which ensures that the maximum amount of income can be used for charitable purposes.
For advice on charitable trusts, please call our 52 North Street office in Chichester or to find out more about our team click through to the staff profile pages featured on the right hand side.