Setting up a family charitable trust isn’t just for the ultra-wealthy—it’s a powerful tax-saving tool that can benefit any profitable business.
While billionaires have been leveraging these trusts for years, most business owners aren’t aware of the massive tax advantages they offer.
From Gift Aid boosts to inheritance tax savings, a charitable trust can protect your wealth while supporting good causes.
(Read Time: Approx. 3 minutes)
Topics Discussed:
- How a family charitable trust can maximise tax savings for businesses and individuals.
- The hidden tax advantages that billionaires use but are accessible to many business owners.
The Power of a Family Charitable Trust
Setting up a family charitable trust isn’t just about philanthropy—it’s one of the best-kept secrets in tax planning.
Not only does it allow you to support causes close to your heart, but it also provides substantial tax relief, helping to protect your wealth for future generations.
Here’s how your business and personal finances can benefit from this powerful tax tool.
Gift Aid: A Double Win for Your Family Charitable Trust
One of the biggest advantages of a charitable trust is Gift Aid, a scheme that boosts donations significantly.
- When your family charitable trust receives a donation, HMRC adds an extra 25%—so every £1 becomes £1.25.
- If you’re a higher-rate taxpayer, you can personally reclaim 40% of your donation, reducing your tax bill.
- Instead of donating directly to random charities, your money stays within your family’s charitable trust, maximising tax relief.
Corporation Tax Savings for Your Business
For business owners, donating to a family charitable trust reduces taxable profits.
This means:
- Every charitable contribution lowers corporation tax liability.
- The funds stay within your charitable trust, keeping control within the family.
- Your business saves tax while supporting causes that align with your values.
If you’re making donations anyway, why not structure them through a charitable trust and keep your tax savings in-house?
100% Inheritance Tax Relief
One of the most overlooked benefits is the 100% inheritance tax (IHT) exemption.
- If you transfer a small portion of your company shares (e.g., 2.5%) into your charitable trust, the dividends are tax-free.
- Any future share value increases within the trust aren’t subject to inheritance tax.
- Your legacy remains intact, rather than a large portion being swallowed by tax when passing wealth to the next generation.
Property Investment and Tax-Free Growth
Your family charitable trust can buy property with significant tax benefits:
- No capital gains tax (CGT) when selling a property within the trust.
- Potential Stamp Duty Land Tax (SDLT) relief on purchases.
- In some cases, even business rates exemptions.
These tax advantages mean that investing in property through your trust is significantly more tax-efficient than personal ownership.
Further Tax Breaks: VAT, Payroll Giving, and More
A family charitable trust can unlock additional tax exemptions, including:
- VAT savings on certain purchases, including fundraising activities.
- Business rates relief of up to 100% on property owned by the trust.
- Payroll giving benefits for employees, allowing tax-free charitable contributions directly from salaries.
When structured properly, your charitable trust becomes a tax-efficient wealth management tool.
Summary
Billionaires have been using these trusts for years to safeguard wealth and reduce tax liabilities—but they’re not just for the super-rich.
If your business is profitable and you want to do some good and create a lasting legacy while benefiting from substantial tax reliefs, this is a strategy worth considering.
At Tax Expert, we specialise in setting up family charitable trusts, ensuring they’re structured to maximise your tax benefits while keeping everything compliant.
If you want to explore how this could work for you, get in touch today—we’ll guide you through the entire process.
Fill out our form here for any questions, give us a call at 01772 788200, or message us on our WhatsApp for out of office hours.
Kind regards,
Ilyas Patel