Carry back Gift Aid donation to retain full personal allowance

Tax_Question_2

Hi all

Hoping you can help me

Just about to complete my tax return online for 11/12

Adding all the numbers up, my total income less personal pension contributions grossed up for basic rate tax is just over £100k

On this basis I will go into the marginal 60% rate band where I loose £1 personal allowance for every £2 income - ouch

I was thinking of making a gift aid donation to bring my income back down to the £100k level. My understanding is that I can make a gift aid donation this tax year but treat it as being paid last year?

If I can do this effectively a £2k donation to the charity (£1600 cash) will only cost me £800 net - which feels like a real win

Or am I missing something? Also are there any other ways of (legally) retrospectively bringing my income back under the £100k threshold?

Any advice appreciated

marlot

I thought the charity reclaimed the basic rate of tax, and you were only allowed to claim the difference between the basic rate and your marginal rate. But it still makes it a good idea - I'm planning to do something similar.

Tax_Question_2

Hi marlot
Thanks for coming back to me
Yes sorry if I wasnt clear, that's what I meant - I make a donation, they recover the basic rate tax (20% or 25% of amount donated) and I reclaim the balance through my tax return
As far as I see it, the charity will get a nice donation, and I will get 60% tax relief on the donation - so it will only cost be 40% of what they get

ceeforcat

There should not be a problem provided you do this before filing the return.

http://www.hmrc.gov.uk/individuals/giving/gift-aid.htm#5