Inner banner

“ They explain my accounts in a way that’s
easy to understand

About us

Tax Saving Tip 3 - Gift Aid Donations

The Gift Aid scheme means that if you’re a UK taxpayer and you give money to a charity, the charity can claim back the tax you’ve paid on this money. For every £1 you give to charity they can claim an extra 25p from HMRC, and if you’re a higher rate taxpayer you can claim the difference between the basic rate of tax claimed by the charity and the higher rate of tax you pay.

For example:

Sue is a 40% taxpayer and donates £1,000 to charity. The charity claims back basic rate tax of 20% from HMRC. The charity claims £250, making Sue’s gross donation £1,250.

Sue can claim the difference between her 40% rate of tax and the basic rate of tax of 20% claimed by the charity on her gross donation. That is a 20% difference. So, Sue claims 20% of £1,250 –a total of £250–from HMRC.

If Sue was an additional rate taxpayer paying 45% on her income, she would be able to claim the difference between her 45% rate of tax and the basic rate of tax at 20% claimed by the charity on her gross donation. That would be a 25% difference. So Sue would claim 25% of £1,250–a total of £312.50 from HMRC.

Gift aid donations to charity give tax relief at your highest marginal tax rate.

You can elect for gift aid cash donations made from 6 April 2019 until the earlier of the date you file your 2019 tax return and 31 January 2020, to be treated for income tax purposes as though they were made in 2018/19.

An election can be made to carry back donations to the previous year, if the carry back rules are met so that relief can be made to minimise tax exposure.