Charitable Giving Through the SA Tax Return

 

• From 6 April 2003, a taxpayer who makes a gift to charity using Gift Aid can elect to have his/her higher rate tax relief carried back to the previous year of assessment, and
• From 6 April 2004, a taxpayer will be able to nominate a charity to receive a tax repayment due to him/her as a result of making the tax return.

Q&A

Carry back

When does the carry back of Gift Aid relief start?

From 6 April 2003. This means taxpayers can claim for donations made from 6 April 2003 to the date they send in their tax return and by 31 January 2004 at latest. (They cannot claim carry back of relief if they file their tax return late - after 31 January.)

What difference will it make?

It means taxpayers can get the tax incentive immediately against the tax on the return.

How is it to be claimed?

By simply entering the donation(s) in the Gift Aid box in the tax return.

Does this affect the charity?

No. A charity will receive a donation with a Gift Aid declaration and will claim its repayment of tax paid on the donation in the same way as it does now. In other words, the charity's tax position is unaffected.

Nominating a charity to receive a repayment

When will taxpayers be able to nominate a charity to receive a tax repayment which is due to them?

In Self Assessment tax returns for 2003/04, issued from April 2004.

Can several charities be nominated?

No - the donation can be made to just one charity.

Can any charity be chosen?

The charity must be chosen from a list published on the Inland Revenue website (from April 2004 onwards). Charities who wish to receive donations this way have been asked to put themselves forward for inclusion on the list. Each charity on the list has been given a unique code which should be used on the tax return to identify the charity to receive the donation. The list will be updated on a quarterly basis.

Can taxpayers limit the amount of their repayment to go to charity?

Yes, they can donate the whole repayment or specify an amount.

Will Gift Aid apply to the donation?

Yes. Donors can make a Gift Aid declaration on the tax return itself. Inland Revenue will pay the tax on Gift Aided donations to charities without the charity making a claim.

What about higher rate relief?

Higher rate taxpayers will be able to claim the relief due to them in the tax return for year in which the donation was made. So, where the 2003/04 return is filed in May 2004 and a repayment is donated to charity, relief will be claimed in the 2004/05 return.

How does gift aid work?

When an individual T/P makes a Gift Aid donation to charity it is treated as paid after deduction of income tax at the basic rate. For example, if he gives £100, it is treated as a gross donation of £128.20 from which tax @22%, £28.20, has been deducted. The donor makes a Gift Aid declaration to the charity.
The charity can then claim the tax treated as deducted, from the Inland Revenue (so gets £128.20 in total).
A higher rate T/P is entitled to further tax relief at the difference between higher and basic rate tax on the gross donation, £128.20 @18%. He claims this by entering the donation on his SA tax return