The Gains from Giving

Going through the January personal tax return busy season I have been struck by the number of clients responding "none" to our query on whether any gift aid payments have been made.

Perhaps I am wrong, but I imagine there are very few people that have not been caught by the give £x a month campaigns for at least one charity. Not to mention the seemingly endless requests from friends and family for sponsorship throughout the year for various excellent causes.

Most people will be aware of the question “Are you a UK taxpayer?” at the time of donation. A positive response to this is great for the charity, as it will make your donation worth 25% more provided total donations are not more than four times the tax paid in that tax year. Wouldn’t we love to be that generous but the cost of living often prevents this.

It seems that fewer people are aware that they could also benefit from more than just a warming glow from doing good. For higher or additional rate tax payers it is possible to claim the difference between the rate paid and basic rate on your donation via your self-assessment tax return.

If a higher rate payer donates £100 to charity under gift aid the charity will receive £125 and the tax payer can personally claim back £25 (£125 x (40% -20%)).

It is a small thing but why not claim what you are entitled to.

Similar savings can be made for contributions into personal pension schemes so don’t forget to include those on your return.

If you have any questions, please feel free to leave a comment or email me on
Emma Humpage – Insight’s Tax Principal