Gift Aid Payment 'Addition' on Tax-Free Amount (which figure)?

YellowStarling

Hi there,

Sorry if (a) this is not the right board for this question and (b) my searches of the forum for whether this particular question has been answered before was not as thorough as it could have been.

I'm hoping you could advise me which specific figure is captured on one's personal tax account, in the Additions section of how the tax-free amount is calculated, in relation to Gift Aid personal tax relief.

For example, let's assume a HR (40%) taxpayer has an initial personal allowance of £12,570 for this tax year, and donated £400 in gift aided payments (meaning charities received £500 in in total) across last year (20/21).  No payroll giving was used.  Let's also assume that enough tax had been paid by the individual to cover the gift aid itself.

In their tax-free amount calculation, what figure would you see in the Gift Aid Payments line of the Additions section?  Would it be £400 (the amount they themselves paid from their net pay); would it be the £500 grossed-up amount the charities received; would it be the £100 difference (20% of the grossed-up contribution) between the BR and HR rates; or would it be another figure?

Many thanks in advance

[Deleted User]

The answer is £250 if you are a higher rate taxpayer.

The grossed up contribution, as you say, is £500. You have received tax relief (by the grossing up from £400 to £500 ) of £100. You wish to claim an additional £100 being 20% (40%-20%) of £500. 

To do that you require £250 of your income not to be taxed at 40%. 40% of £250 is £100.

YellowStarling

Perfect, thanks Purdyoaten2.  I always suspected it couldn't be the other figures given it needed to be an amount 'subjected' to tax, so your explanation makes sense.  Thank you.