Readers’ forum: Giving money to charity above annual income

Gift aid

A client has established a private charitable trust with which he intends to support good causes. He wants to give it more money upfront than he has taxable income this year. I recall from years ago the idea of a ‘deposited covenant’ – does that still work for gift aid? If his income is £100 000 a year and he endows the charity with £300 000 in round terms he will make an initial gift of £100 000 together with an interest-free loan of £200 000 then write the loan off as gift aid donations over the next two years. I believe that is acceptable but would like reassurance.

I also am concerned that the purpose of the gift is to buy a holiday cottage. He says that this is an investment property and the rent will all be used for charitable purposes. Further...