Tax Relief On Donations To Charity

Question 1

What is the effect of a charitable donation under the Gift Aid Scheme on the taxpayer’s basic rate and higher rate limits?

Answer 1

The limits are extended by the donation grossed up by 100/80.

This refers to ITA 2007, s.414.

Question 2

What percentage relief is given at source for Gift Aid donations?

Answer 2

20% relief is given at source.

This is applicable for taxpayers making donations under the Gift Aid Scheme.

Question 3

How do higher rate and additional rate taxpayers receive further relief on Gift Aid donations?

Answer 3

They receive relief by increasing the amount of income taxed at basic rate rather than at higher rates.

Question 4

What must a taxpayer pay to cover the tax treated as deducted at source from the donation?

Answer 4

Sufficient income and/or capital gains tax.

Question 5

What is the provision for carrying back Gift Aid donations?

Answer 5

Donations can be carried back and treated as having been made in the previous tax year.

Both the donation and the election to carry back must be made by 31 January in the tax year (ITA 2007, s.426).

Question 6

How is the grossed-up donation treated when calculating a personal allowance?

Answer 6

It is deducted from net income prior to calculating any restriction required.

Question 7

What can be deducted from income when a gift of quoted shares or land is made to charity?

Answer 7

The market value of those shares or the land.

This is stated under ITA 2007, s.431.