Dear Listener

There has been a lot in the press this week about tax relief on donations to charity by wealthy people. It works like this. They give money to charity - say 100,000 pounds - and their tax bill is reduced by 50,000 pounds. So giving to charity still costs the donor money.

At the moment they can give any amount - as long as they pay tax in the tax year equal to the donation. But from next April the Government is proposing to cap donations at 25 percent of their income or 50,000 pounds whichever is the higher. So to give £100,000 gross to charity a person would need an income of at least 400,000 pounds.

Here is the arithmetic. W writes a cheque for 80,000 pounds through Gift Aid. HMRC pays the charity an extra 20,000 pounds representing the basic rate tax paid on the total 100,000 pounds. W then puts the amount on their self-assessment form and reclaims 30,000 pounds off the remaining tax bill. The maximum gift W can make to charity is 25 percent of their income. The total amount to the charity is 100,000 pounds so W needs an income of at least 400,000 pounds. Under the present rules W would need an income of only 75,290 pounds to give that much through Gift Aid.

Figures from HMRC show that the cost of higher and top rate tax relief cost 360 million pounds in lost revenue in 2011/12. That implies about a billion pounds was given to charity in this way by higher and top rate taxpayers. So that is the maximum amount charities could lose if all relevant donations stopped.

But donations would not be affected if they were 25 percent or less of taxable income. There are no official estimates of how many people currently give a higher proportion than that.

***IN MONEY BOX THIS WEEK***

Around 100 million pounds has been lost over the last four years by investors in wine as the firms they trusted with their money went into administration. One firm, which went into administration earlier this year,  has claims of 10.5 million pounds against it. How can you protect yourself from losing money.

Shops and sub-postmasters are running out of stamps as people take the advice on Money Box to buy first and second class stamps now before the price rises by more than 30 percent on April 30. We explain how you can still buy all the stamps you want at the current price.

Around 100,000 disabled people who have been on Employment and Support Allowance for more than a year will lose it on April 30. The benefit, worth 99.15 pounds a week or more than 5000 pounds a year will end unless they have no partner and or no other income.

And the long wait on the HMRC helpline before it cuts you off.

We may or may not squeeze all four stories in to our 24 minutes of Radio 4. You can hear what we achieve by listening live at midday on Saturday, repeated Sunday 9pm, or anytime online at www.bbc.co.uk/podcasts/series/moneybox. Remember you can put in a regular order for our podcast. It is free.

There is more information on our website www.bbc.co.uk/moneybox where you can also download transcripts of past programmes and send us ideas or problems you want us to look into.

This newsletter is available at www.bbc.co.uk/moneybox/newsletter around the time it hits your inbox - tell your friends who do not subscribe. And you could join more than 29,000 people who now follow me on Twitter to enjoy - or rant about - my random but timely thoughts on money and a few other things whenever I am awake at www.twitter.com/paullewismoney.

Vincent Duggleby is here on Wednesday with Money Box Live at 3pm taking questions on saving and investing.

Best wishes,

Paul

PS. I will be on Breakfast on BBC One on Saturday talking about two of the items in our programme at 0840 and 0940. And back on Breakfast on Wednesday morning with another money story. Times vary but probably 0640 and 0820. Live from Salford. Beware, times can change at short notice.

e-mail Paul Lewis