Gift Aid and Higher Rate Taxpayers

Donating to UK registered charities through gift aid means that the charity can reclaim tax from HMRC. For every £100 given, they can claim back an extra £25!

Does everyone qualify for gift aid?

No. The charity will effectively claim back the tax you already paid to HMRC on your salary, pension or other income so in order to qualify for gift aid, you need to have paid at least as much tax as is being reclaimed.

In practice, your donations will qualify as long as they’re not more than 4 times what you have paid in tax during the tax year.

For basic rate taxpayers (generally, those earning between £11,500 and £45,000), the charity receives all of the tax benefit from your donations and, after signing the initial gift aid declaration, you need take no further action.

What about higher rate taxpayers?

The government are keen to encourage charitable giving. As well as the charity being able to reclaim an extra £25 for every £100 given, higher rate taxpayers can also claim an additional £25 tax refund personally (additional rate taxpayers can claim back £31.25).

This means the charity will receive £125 for a cost of only £75 to you (or £68.75 if you are an additional rate taxpayer).

For those earning between £100,000 and £123,000, the tax benefits are even greater and the charity could receive £125 for a cost of only £50 to you!

How do I claim the higher rate tax relief?

Higher rate taxpayers can claim their gift aid relief via a tax return or by contacting HMRC directly. The process is not always straightforward, but claims can be made going back four years and sometimes result in very large repayments.

If you have any questions or would like help claiming the tax back, Simon Tadman at SRT Tax Consulting would be delighted to help.