Giving to charity
Charitable donations made under the Gift Aid scheme allow a charity to claim back 20% basic rate tax on any donations and if the donor is a higher rate taxpayer they can claim back the tax difference between the higher rate and the basic rate on the donation. Therefore a cash gift of £80 will generate a refund of £20 for the charity so that it ends up with £100. The donor can claim back tax of £20 so that the net cost of the gift is only £60.
Where the 45% additional rate of tax applies, the net cost of the gift in this example would be only £55 for an individual liable at this rate.
Tax relief against 2016/17 income is possible for charitable donations made between 6 April 2017 and 31 January 2018 providing the payment is made before filing the 2016/17 tax return.
Always remember to keep a record of any gifts you make.
It may also be possible to make gifts of quoted shares and securities or land and buildings to charities and claim income tax relief on the value of the gift. This may be tax efficient for larger charitable donations.