Giving Stuff to Charity Shops

[Deleted User]

Can someone confirm if I'm correct on this, or correct me if I'm wrong please...

1) Giving, say, £50 to charity, and giftaiding it, can be written off against tax on a tax return.

2) Some charity shops take your old stuff, "sell" it "on your behalf", and keep the proceeds (after sending you a letter asking if you want to be a miser and keep the proceeds for yourself).

3) By doing this, you're giving the cash proceeds to the charity, not the original goods you left at the shop.

4) Therefore, when you get the letter saying "your goods have sold for £50, thank you very much", you can write that £50 off as a cash donation, thus reducing your tax bill?

5) And, in addition, charity donations also reduce the assessable income for tax credits, meaning a bigger tax credits payout too?


__EDIT: I think I've found the answer... the above would only be right for higher rate tax payers. However, the value of these donations can still be used to reduce the income figure used in a tax credits calculation, right? (https://www.gov.uk/tax-credits-working-out-income)

anselld

Depends how the charity shop operates. The fact that you get offered the money suggests they are operating "retail gift aid" ......
http://www.hmrc.gov.uk/charities/gift_aid/rules/retail.htm

scragend

billbennett wrote: »

1) Giving, say, £50 to charity, and giftaiding it, can be written off against tax on a tax return.

No it can't.

If you are a basic rate taxpayer and you give £50 to a charity under Gift Aid, the charity will claim back basic rate tax on it. It makes no difference to your tax position.

If you are a higher rate taxpayer then you get your basic rate band extended by £62.50 (£50 grossed up), so you are getting £12.50 "off your tax" (by getting a further £62.50 taxed at 20% rather than 40%).

If you are thinking that giving £50 to charity means that your tax bill at the end of the year goes down by £50, then that's not the case.