If you are a higher rate or additional rate taxpayer, you are eligible to claim relief on the difference between the basic rate and your highest rate of tax. The charity you donate to can reclaim the basic rate of tax from donations made by taxpayers.
For example:
If you donated £5,000 to charity, the total value of the donation to the charity is £6,250. You can claim back additional tax back of:
- £1,250 if you pay tax at the higher rate of 40% (£6,250 × 20%),
- £1,562.50 if you pay tax at the additional rate of 45% (£6,250 × 20%) plus (£6,250 × 5%).
Carry back gifts to speed up tax benefits
If you have made a gift to a charity in the 2018-19 tax year, you can carry back the gift to the previous tax year as long as you do this before filing the 2018-19 return. This can accelerate repayment of any tax associated with your charitable giving. This can also be a useful strategy if you are not a higher rate tax payer in the current year, but you were in the previous year.
You can only claim if your donations qualify for gift aid. This means that your donations from both tax years together must not be more than 4 times what you paid in tax in the previous year. If you do not complete a tax return you need to use a P810 form to make a claim.