Tax Relief On Tennis Racquets?
Many taxpayers make regular donations to charity and also one-off payments for disaster funds, Comic Relief and others. However, if you do not include details of these payments on your self assessment tax return you will be losing out on valuable additional tax relief.
The Benefit To the Charity
Wherever possible, a gift to charity should be accompanied by a Gift Aid declaration. You will usually be given the option to sign a declaration provided that you are giving to a registered charity. You can also sign a declaration that will cover your past or future donations. If you are giving over the telephone you can make the declaration verbally. In order to obtain any tax relief at all your donation must come under the Gift Aid scheme. This arrangement earns millions of pounds for charities so you should not assume that this is not important to them.
Once a Gift Aid declaration is made the charity can claim basic rate tax relief from the government. This means that if you pay £100 to charity, the charity is entitled to reclaim £25. This is based on the current basic tax rate of 20% but until recently the tax rate was 22%. To compensate for this loss, the government has decided that for a period of 3 years charities can continue to reclaim at 22%. So, for the time being your £100 donation is worth £128 rather than £125.
The Benefit To You
If you are a 40% taxpayer, you can also claim higher rate tax relief on the donation. If you pay £100 under Gift Aid your tax bill for that tax year will reduce by £25. You can even elect for tax relief to be given in the previous tax year if your tax rate was higher last year than this year.
If you do not have any spare cash to give, you can arrange to donate unwanted goods to a charity shop. They agree to act as your agent and sell the items and you can then decide that you want to give the proceeds as a Gift Aid donation. Who would have thought that you would get higher rate tax relief on your old clothes, books and tennis racquets!
How To Claim Your Additional Tax Relief
All you need to do is give us a list of your Gift Aid donations when we are completing your tax return. We will claim the tax relief and let you know how much your reduced tax bill is. If you are due a tax refund you can donate it to charity through your tax return. This gift can itself be given under the Gift Aid provisions.
You may already be making payments that could be covered by Gift Aid for example, your National Trust membership. Don’t miss out on claiming this tax relief which is of great benefit to the charity and gives you a bit of a bonus too! |
