[DAYS_LEFT] days left of your Medeconomics free trial

Subscribe now

Your free trial has expired

Subscribe now to access Medeconomics

Charity donations and Gift Aid scheme

Every five weeks or so, I visit the same excellent hairdressers in Cockfosters who keep me neatly trimmed in a respectable fashion for just less than £30 including tips. Last Friday, I had the regular treatment and on the way back to my car, stopped off at the cash point to draw out some money.

Irritatingly, I found the space on the pavement by the cash machine occupied by a young man sitting against the wall looking up with doleful eyes. In fact I recognised the young man who had left the hairdressers shortly after I walked in.

Predictably, as the cash was dispensed, the young man looked up and asked if I had any change. The dialogue that followed went something like this:

Young man: 'scuse me, can you spare some change mate?'

Me: 'Can you let me have a gift aid form?'

Young man: 'Eh?'

Me: 'If you are asking for a charitable donation, you can reclaim the basic rate tax and I can reclaim the higher rate tax, but the donation had to be made under gift aid.'

At this point, there was no response but a long hard stare. I would love to have suggested he tried to save money by having his hair cut by one of the trainees rather than the senior stylist, but, I am just not that brave.

But actually, there is a point here. While most taxpayers know that giving money to charity under gift aid gives the charity tax relief, it is often forgotten that the taxpayer can reclaim higher rate tax relief on the donation made. So, for instance, in the example above, a taxpayer currently paying tax at 50% can reclaim the following:

Gross value of the donation?                 £125.00

Tax Relief at 50%?                                   £62.50

Less Tax Relief already given?                £25.00

Additional Tax reclaimed?                        £37.50

If you are a taxpayer paying 40% tax, the reclaim is:

Gross value of the donation?                 £125.00

Tax Relief at 40%?                                   £50.00

Less Tax Relief already given?                £25.00

Additional Tax reclaimed?                        £25.00

Both the charity and the taxpayer benefit, so wherever you can you should "Gift Aid" your donations. To get the tax relief, just tell your accountant or put the details on your tax return.

More information can be found at: www.hmrc.gov.uk/individuals/giving/gift-aid.htm

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.

Database of GP Fees




Latest Jobs