Hi, Does anyone know if i pay money to a registered charity, can i save on tax? Does it matter whatthe money is for? What i mean is i pay school fees and the school association is a registered charity. Any help much appreciated!
As far as I know the answer is no as in that situation it isn't a gift you are making but a payment in return for services and anyway under gift aid (assuming standard rate taxpayer) you don't save the tax as such, the tax is refunded direct the charity concerned at 28p for every pound you give.
Only if it is paid under the gift aid scheme. The charity gets the refund for basic rate tax, not you.
Yes
School fees are specifically excluded from the gift aid scheme.
Except that if he's talking school fees there's a good chance he's a HRTP, so he personally could get 23p back for every pound he gives.
More simply put, the charity gets 22p back for every 78p he gives (which for a SRTP means that for every pound he earns, 22p tax was taken away, leaving him 78p in hand, and if he donates the 78p, the charity gets the benefit of the whole earned pound). Basically, the earned pound was only worth 78p to him, and so he should lose only 78p for the charity to get its pound.
For a HRTP the principle is the same. He should lose 60p of in-hand money for every pound he earned and which goes to the charity. So, to make sure the charity gets its pound, he has to give them 78p first, so they can claim 22p from the taxman. To have lost only 60p, though, he gets the 18p back from the taxman, so the taxman loses the whole 40p from the taxpayer's earned pound.
Looking at it another way, he ought to have given 60p to charity and the charity should have reclaimed 40p. But to keep the admin simpler for charities, they don't need to know what level of taxpayer the donor is, and that's why it's done this way. He doesn't physically apply to get the 18p back, but by telling the taxman that he has gift-aided 78p, the taxman will stretch the donor's basic rate band by 78p, thereby ensuring he pays 18p lass tax on other income.
The "28p" and "23p" figures arise from scaling the 78p up to a pound, which scales the 22p and 18p up to 28.21p and 23.08p.
No chance!
Generally true, but there are certain exceptions. For example annual membership of organisations like the National Trust counts as Gift Aid even though most people join for free entry to the properties rather than to be charitable.
Also I was surprised when we went Edinburgh zoo, they were waving gift aid forms about asking people to gift aid their entrance fees. I was there with a load of my familiy, and I generously volunteered to pay (the 30%+ rebate I'd get off the taxman never crossed my mind....).
But a higher rate taxpayer gets 23% of any gift aid donation back from the taxman. Also pensioners who get a lower tax allowance because their income exceeds 18,000 or whatever it is, can get tax back. It was even better when the old children's tax credit was around.....
The rules are here:
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