I have been paying 40 per month to charity. The money has been deducted from my personal account.
Do you get tax relief on charity payments only if it is paid through the business or do private individuals get relief too? I am self employed.
Jon
Normally you don't get relief, the charity does.
You should make, or have made, a Gift Aid declaration. This will allow the charity to reclaim 22p from the Tax Man for every 78p you've donated to them. In other words, you earn a pound, the taxman takes 22p away leaving you 78p, which you then give to the charity, and it gets the 22p back from the taxman.
Only if you are a higher rate taxpayer, would you get tax relief. The idea is that the charity still gets the pound your earned, but this now costs you only 60p instead. The way it works is that you first give the charity 78p as before, being 60p net from your gross pound plus 18p out of "savings". The charity doesn't need to know your tax status and just claims 22p from the taxman as before, but you then claim the 18p back from the taxman to re-stock your savings.
In practice the way it's done is that you tell the taxman about your Gift Aid donations, and he widens your standard rate band by the gross amount of the donations (a pound in the example) so that one pound of your income is now taxed at 22% instead of 40%.
In message , Ronald Raygun writes
Which means you can afford to increase the donation!
How do you work that out, then?
Hi Ronald,
thank you for that clear explanation - I've been struggling to understand this subject for the past few days. I'm glad I happened upon your posting!
Joe.
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