Charitable Donations and Tax Relief
Discussion
Due to a screw-up in the Tax Code my employer has been using, I now owe quite a substantial amount of extra tax. Rather than the money going to this incompetent government, I'd rather make charitable donations if I can get 100% tax relief, especially as my employer has a donations matching program where they will match my donations pound for pound. Does anyone know if there are any types of organisations where I can get 100% relief? Are their any other benefits beyond the 'feel good' factor? Any other options that give me 100% tax relief? Ta
I'm a higher rate tax payer. I owe tax for (this) '08-'09 tax year so I was wondering if there are things I can do before April 6th. The tax I have to pay should be due Jan '10 - are you suggesting I may donate in Tax Year '09-'10 tax year, it may be possible to offset? Would that require paying out twice?
If you make a charitable donation NOW, it will only affect the 2008/09 tax situation. It cannot be backdated.
However, you need to know how tax relief is given on charitable donations.
Firstly, when you make a donation and want tax relief on it, it MUST be made either under a formal "Deed of Covenant", an employer scheme or through the "Gift Aid" scheme.
Secondly, tax relief is given at source at Basic Rate tax, Therefore, if YOU make a payment of £80 to a charity, there will be a tax relief amount of £20 going with that donation. However, the taxpayer never sees this. The charity make a claim to the Revenue who refund the £20 directly to them.
If you are a higher rate taxpayer, the full tax relief on the £80 donation would actually be £53.33 (to earn Net £80.00, a higher rate taxpayer needs to earn Gross £133.33. Of the £53.33 tax charged on Gross £133.33, £20.00 has been refunded directly to the Charity by the government. You can claim back the balance of £33.33. The balance of £33.33 will be made available to the taxpayer through a direct tax refund or an amendment to their PAYE tax code.
However, you need to know how tax relief is given on charitable donations.
Firstly, when you make a donation and want tax relief on it, it MUST be made either under a formal "Deed of Covenant", an employer scheme or through the "Gift Aid" scheme.
Secondly, tax relief is given at source at Basic Rate tax, Therefore, if YOU make a payment of £80 to a charity, there will be a tax relief amount of £20 going with that donation. However, the taxpayer never sees this. The charity make a claim to the Revenue who refund the £20 directly to them.
If you are a higher rate taxpayer, the full tax relief on the £80 donation would actually be £53.33 (to earn Net £80.00, a higher rate taxpayer needs to earn Gross £133.33. Of the £53.33 tax charged on Gross £133.33, £20.00 has been refunded directly to the Charity by the government. You can claim back the balance of £33.33. The balance of £33.33 will be made available to the taxpayer through a direct tax refund or an amendment to their PAYE tax code.
Eric Mc said:
If you make a charitable donation NOW, it will only affect the 2008/09 tax situation. It cannot be backdated.
However, you need to know how tax relief is given on charitable donations.
Firstly, when you make a donation and want tax relief on it, it MUST be made either under a formal "Deed of Covenant", an employer scheme or through the "Gift Aid" scheme.
Secondly, tax relief is given at source at Basic Rate tax, Therefore, if YOU make a payment of £80 to a charity, there will be a tax relief amount of £20 going with that donation. However, the taxpayer never sees this. The charity make a claim to the Revenue who refund the £20 directly to them.
If you are a higher rate taxpayer, the full tax relief on the £80 donation would actually be £53.33 (to earn Net £80.00, a higher rate taxpayer needs to earn Gross £133.33. Of the £53.33 tax charged on Gross £133.33, £20.00 has been refunded directly to the Charity by the government. You can claim back the balance of £33.33. The balance of £33.33 will be made available to the taxpayer through a direct tax refund or an amendment to their PAYE tax code.
Thanks - I think! Looks a little complex and I'm going to read this a few times to make sure I understand the implications for what I was thinking to do - and speak with my employer, as I think they do have a gift aid scheme. Thanks again Eric!However, you need to know how tax relief is given on charitable donations.
Firstly, when you make a donation and want tax relief on it, it MUST be made either under a formal "Deed of Covenant", an employer scheme or through the "Gift Aid" scheme.
Secondly, tax relief is given at source at Basic Rate tax, Therefore, if YOU make a payment of £80 to a charity, there will be a tax relief amount of £20 going with that donation. However, the taxpayer never sees this. The charity make a claim to the Revenue who refund the £20 directly to them.
If you are a higher rate taxpayer, the full tax relief on the £80 donation would actually be £53.33 (to earn Net £80.00, a higher rate taxpayer needs to earn Gross £133.33. Of the £53.33 tax charged on Gross £133.33, £20.00 has been refunded directly to the Charity by the government. You can claim back the balance of £33.33. The balance of £33.33 will be made available to the taxpayer through a direct tax refund or an amendment to their PAYE tax code.
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