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Charitable giving: claiming tax relief on your donations

Using the Gift Aid scheme to make charitable donations can both benefit the charity you give to, and improve your own tax position. If you do so, and you are a higher rate taxpayer, then you are entitled to tax relief.

The reason is that the charity can reclaim the basic rate tax which is deemed to have been deducted before your gift is made. The effect of this is that the charity can reclaim just over 28% of the amount you give. (The impact of the reduction in the basic rate of income tax relief from 22% to 20% on charities has been deferred until April 2011, by transitional relief provisions).

If you are a 40% taxpayer and donate £1,200 to charities over the year, you are entitled to £300 of additional personal tax relief. And if you qualify for a tax refund, we can even tick a box on your Tax Return and have the refund made over to the charity of your choice – and that gift will also qualify for Gift Aid tax relief!

Donations can be made regularly – by direct debit, for example – or as a one-off. They do not even need to be made in cash – talk to us about gifts from business and gifts of non-cash assets.

Record keeping has become vital under self assessment. We need to be able to prove every figure on your Tax Return and you should keep personal financial records relating to your Tax Return for at least six years. Your entitlement to Gift Aid tax relief might provide an incentive.

Please contact us for more information on how Gift Aid may help to reduce your tax payments.

Contact us for more information and advice.


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