Chapter 8 Tax Relief on Donations to Charity

Question 1

Donations to charity

Answer 1

Gift aid – payments are made net of 20% basic rate of tax. When making a gift aid donation this extends the basic rate and higher limits. For example, if an individual paid £800 of gift aid. You gross is up by 100/80 to get 1,000 and then you extend the limits by 1000. So, the new higher rate band is after £38,500.
Carry back of gift aid donations – the taxpayer can make an election for a gift aid donation to be treated as been made in the previous year. the donation and the election must be made no later than the 31 January in the tax year in which the gift was made. The election must be made by 31 January 2020 for 19/20 tax year.
Interaction with personal allowances – the PA is restricted when adjusted net income exceeds £100,000. Adjusted net income is actual net income less gift aid donations (gross).
Gifts of quoted shares and land – if a taxpayer gives quoted shares on a recognised stock exchange to a registered charity, the value of the shares at the date of the gift is treated as a deductible payment in the income tax computation. This relief also applies to land and buildings.