The Band Aid 30 charity single Do They Know It’s Christmas is selling ‘like crazy’ according to veteran rocker Bob Geldof.
Geldof announced the song had raised £1 million in just few minutes to help fund the fight against the spread of the deadly Ebola virus in Africa.
Many of the leading names in British pop and rock joined forces to record the song; resurrected 30 years after the original topped the charts.
Stars with a singing credit include boy band One Direction, U2’s Bono, former Led Zeppelin lead singer Robert Plant and Coldplay’s Chris Martin.
Ebola has claimed more than 5,000 victims, mostly in Sierra Leone, Liberia and Guinea, since breaking out in West Africa in February, according to the World Health Organisation.
Cutting IHT
Buying an electronic download for 99p is a relatively easy way for a lot of people to give a small amount to charity, but if you are a wealthy individual and want to try and make a bigger difference by sharing your money with those that are less well off, the options are not so clear.
However, gifting to charity can lead to significant cuts in inheritance tax when you die.
Since April 2012, donating 10% of your estate to charity will allow the tax man to slice your inheritance tax rate from 40% to 36%, while that 10% of the estate is exempt from inheritance tax.
Here’s how gifting to Band Aid 30 can help the charity and save tax taking an estate of £750,000.
First, without any gift to Band Aid 30 or a gift of less than 10% of the estate, inheritance tax is worked out as 40% of the net estate, which is £750,000 less the nil-rate tax band of £325,000.
So, the inheritance tax paid is £750,000 – £325,000 x 40%, which is £170,000
How the figures work
Now, assume a donation to band Aid 30 of 10% of the estate.
The gift decreases the estate value by £750,000 – £75,000 to £675,000. The £75,000 remains free of tax.
Next, take the nil rate band from the remaining estate, which is £675,000 – £325,000 = £350,000, and then apply inheritance tax at the reduced rate of 36%. This leaves a tax bill of £126,000.
In the first scenario, the net estate after tax is worth £580,000, while in the second scenario, the value after tax is £624,000.
Gifting 10% of your estate is a win/win for Band Aid 30, which receives more money as no tax is paid on the windfall, while the beneficiaries also benefit from paying inheritance tax at a lower rate.
