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Personal and Tax Planning
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I want to give some money to charity but I don't pay much tax. Can I still make a Gift Aid donation, so the charity gets some tax back?
The Gift Aid scheme allows those making gifts to charity to make donations net of basic rate tax (22%) and to claim a tax deduction for relief at the higher rate. Thus, someone paying tax at 40% could make a net gift of £780 to a charity, and deduct £180 from his or her income tax liability for the year. A net cost to the donor of £600, and when the charity recovers the basic rate tax deducted from the Inland Revenue, a total of £1,000 goes to the charity.
In the past, you might have paid income tax at only the 10% rate, and faced a bill to make up the tax withheld from your charitable donations to the full basic rate. As a result of changes which took effect in April 2000, it is enough that you pay at least as much tax - capital gains tax as well as income tax - as you have deducted from your charitable donation.
Subject to this condition, for every £10 you give the charity, it will be able to recover £2.82 from the Inland Revenue.
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