SATR

At some point, you may consider making charitable donations, either personally or through your company. Charitable giving has benefits both for the individual and businesses in the UK. To make a gift aid donation, follow these steps.

For 2023/24, Scotland has income tax rates of 19%, 20%, 21%, 42% and 47%. Those paying 19% are treated in the same way as 20% taxpayers – but may need to take extra care that they have paid enough tax to cover the Gift Aid claim. Those paying 21%, 42% or 47% can claim extra relief in the same way as those in the rest of the UK.

If you pay Higher Rate Tax (40%), you can claim back the difference between the higher and basic rate of tax on all gross Gift Aid donations. For instance, if you gift £10, you effectively make a gross gift of £12.50 and can claim £2.50.

If you’re 65 or older, your gross Gift aid donations are deducted from your taxable income, which can impact your age-related allowance positively, additionally, you can include Gift Aid donations on your tax credit application potentially leading to more tax credits.

From 15th March 2023, the definitions of a charity for tax purposes have been changed so that only UK charities are eligible for charitable tax reliefs. This impacts EU and EEA charities particularly. If an individual makes a donation to a non-UK charity after 15 March 2023, UK tax reliefs (such as Gift Aid) are only available if the charity has ‘asserted their UK charitable status’ previously with HMRC under transitional provisions which last until 5 April 2024 for individuals. After April 2024, taxpayers will not be eligible for UK tax relief on donations to EU or EEA charities.

Individuals in the UK can make Gift Aid donations, which allow charities to reclaim Basic Rate Tax on their contribution directly from HMRC. This means your gift is worth more to the charity at no extra cost to you. These rules also apply if you operate as a sole trader or a partnership.