Claiming Donations on your UK Tax Return
Donations to charity are tax-free, and you can claim tax relief if you donate through Gift Aid or donate straight from your wages and/or pension – by using Gift Aid, or Payroll Giving, or a few other ways. In this article, we will be explaining the following:
Gift Aid:
How to claim donations using Gift Aid
Keynotes about Gift Aid
High Taxpayers and Gift Aid
What if you want to get tax relief sooner?
Can a donor sign up for Gift Aid?
Payroll Giving and Other Ways of Donating:
1. Payroll Giving
2. How much is the tax relief with PG?
3. Donating land, property, or shares
4. In your will
How Do you Claim donations with gift aid?
You first need to make a Gift Aid Declaration for the charity, which you do by filling in a form. This is because you need to make a declaration to each and every charity that you will be donating to, by using Gift Aid.
Some key notes about Gift Aid:
· A charity can claim Gift Aid when you made a donation from your own funds and have paid Capital Gains Tax (CGT) or UK Income Tax.
· The amount of tax paid needs to be equal to the value of either the Charity or Gift Aid
· By donating to GA, it means charities can claim an extra 25p for every £1 donated to them (this does not cost you any extra)
· Charities can claim GA on most donations, but you will need to check as not all payments qualify.
Higher Rate taxpayers
If you pay above the basic tax rate, you will be able to claim the difference between the rate that you pay, and the basic rate on your donation(s).
What if I want to get tax relief sooner?
How it works with Gift Aid, is you can also claim tax relief on donations you make in the current tax year – IF you either:
1. Want tax relief sooner
2. Won’t pay higher rate tax in the current year, but you did in the previous year
You cannot do this if:
1. Your donations do not qualify for Gift Aid. Click here to see the qualifications needed.
If you’re also found to be claiming Gift Aid without notifying HMRC about no longer paying enough tax – you will need to pay back any difference.
Can a donor sign up for ga?
A donor is eligible for signing a single GA declaration – once a charity is set up to benefit from the GA scheme.
If they’ve made any donations in the past to a specific charity, they can still claim GA by filling out multiple donation declaration forms.
Other ways of claiming Donations?
Payroll Giving
If your employer, company, or pension provider runs a Payroll Giving (PR) Scheme – you can donate automatically from your wages and/or pension.
It will transfer before your tax is deducted from your income.
One thing to note about the Payroll Giving scheme is that you cannot donate to amateur sports clubs through Payroll Giving.
Donating land, property, or shares
You do not have to pay tax on land, property, or any shares that you want to donate to charity, even if you’re selling them for less than their market value. You also claim tax relief on both Income Tax and Capital Gains Tax.
If you would like any further advice regarding all areas of UK Tax do not hesitate to contact us