Charity tax relied

It's probably going to work out the same, but it's administratively easier to do it privately via Gift Aid.

You paid net of standard rate. For every £78 given, the charity will reclaim £22 directly from the taxman, to make it the same as if the whole £100 you earned all went to the charity, i.e. the £22 tax you paid from the £100 left you with £78 to give, and the charity hits the taxman for these £22 he took from you.

If you're a standard rate payer, that's the end of it.

If you pay tax at higher rate, nothing changes for the charity, but you claim the other £18 back from the taxman. The theoretical cash flow is like this: You earn £100, taxman takes £40 off you. You then give the charity those £60 and another £18 you borrowed from your teenage daughter. The charity then acts as before and gets £22 from the taxman and has the whole £100 you earned. The taxman gives you back the other £18 and you can repay your daughter.

In practice, this "giving back of £18" doesn't actually happen, but rather your standard rate tax band is artificially widened by £100, with the result that £100 more of your other income is taxed at

Thank you for the detailed explanation. The money has already come out of my personal account in 2004 for these charity payments. With Gift Aid, do I need to have filled in a form at the beginning when I made payments or do I just need to fill in a form now?

You can do it now. Get the form from the charity and give it back to them. You don't need to retain a copy.

Most charities now use the new-style wording on their Gift Aid Declaration forms, which is retro-active for all donations made since Gift Aid came into force, which happened on 6th April 2000.