Covenant is an old-fashioned word which in modern English is the equivalent of 'undertake' or 'promise'. If an individual or a company undertakes to pay a charity a certain sum each year for a minimum of seven years, then the charity is able to reclaim the standard rate of income tax payable on that amount.

Under the relevant Finance Act there is no provision for the reclaiming of tax at reduced rates.

The advantages to the R.N.L.I. are considerable. The value of the subscription is greatly increased if it is covenanted, without any extra cost to the donor.

Although the minimum number of years for a covenant is seven, it can be for 10 years, or longer. All liability under a deed ceases at the end of the period specified. In the case of individuals it ends upon death (if a shorter period) with no liability passing to the executors.

The following table gives examples of how the subscription is increased by over 70 per cent: Annual sum paid Amount of income tax Total benefit over by subscriber reclaimed each year seven years £ s. d. £ s. d. £ s. d. 1 0 0 14 1 11 18 7 300 222 35 15 2 500 3 10 3 59 11 9 10 0 0 705 ! 119 2 11 50 0 0 35 2 1 595 14 7 100 0 0 70 4 3 1,191 9 9.