Is it true that if I make (regular or one-off) gifts to my church or child's school, and have completed a gift aid form for this, I can claim tax back on those contributions?
Arthur Weller replies:
If your church or child’s school is a registered charity, either registered with the Charity Commission or with HMRC, you can make gift aid payments to them, both regular or one-off. However, it is the charity that claims back the tax, not the individual donor. So, if you make a donation of £80, this is grossed up to £100, and the charity can claim back the £20 from HMRC. In order for this to be possible your UK tax liability for the tax year (made up of both income tax and capital gains tax) must be sufficient to cover the tax reclaimed by the charity. So, gift aid is also available to non-UK residents, as long as they have a UK tax liability. The advantage to you is that if you are a higher rate taxpayer, you get tax relief for the donation at your highest marginal rate of tax. So, in practice, the way it works is that the individual’s basic rate tax band is increased by the amount of the gross amount of the donations (£100 in our example).