What is the difference between the UK and USA tax system?
There is a lot of debate at the moment about “US style” philanthropy and there is a widely held belief that that will only be possible if we have a “US style” incentive system tax. This page sets out what features the tax systems in the US and the UK share, and where the differences actually lie. First, the two systems share a core philosophy: if you give money or an asset to a Charity (*) then you shouldn’t have to pay tax on it. There are four main ways in which an individual can financially support a Charity in either the UK or US: • Direct cash support • Indirect cash support via payroll • Indirect cash support via an intermediary • Direct support through gift of an asset other than cash. In almost all instances the donor gets some or all of the tax breaks available and, as the following will show, in most instances the tax treatment of that philanthropy is identical in both countries. 1. Gift of cash If someone in the US gives cash they are able to use their tax return to deduct t
