If you pay income tax at 40% or more, you can get some extra tax relief from your charitable donations by ticking the ‘Gift Aid’ box. The additional tax relief, above 20%, can be claimed on your tax return for the year in which the donation was made.
Alternatively, you can elect to treat some or all of your Gift Aid donations as if they were paid in the tax year immediately before the year in which the gifts were made. This gives you the additional tax relief a year earlier, which is particularly beneficial if your tax rate was higher in that earlier year. The carry-back election must be made on your tax return for that earlier tax year when it is first submitted; you cannot make a carry-back claim by amending a tax return already filed.
It is essential that any Gift Aid claims are carefully checked before the tax return is finalised. Where a mistake is made in the declared donations, any correction will automatically be treated as an amended tax return, so the original Gift Aid figures will have to stand.
If you plan to make a large charitable gift, after say the sale of your business, discuss the timing with us.
