Using gifts to charity shops to cut tax ?

baby_boomer

I've lined up my earnings for 2022/23 and find that a combination of fiscal drag and rising interest rates have drawn me (just) into a higher tax band which I'm not used to. Am I right in thinking that gifts to charity shops could help alleviate this? I've made lots of gift aided donations and have emails from the charity shops saying what my gifts have earned them. Thanks in advance.

[Deleted User]

They could if under gift aid. A gift aid donation of £100 will be worth £125 to the charity and extend the threshold after which you pay 40% tax by the same amount.

Jeremy535897

This explains it:

"Selling donated goods on behalf of individuals

This process is exclusive to charity shops that operate a retail Gift Aid scheme to sell goods on behalf of donors. To maximise the amount raised, charities can sell valuable or collectable items donated to a shop. This can be at a commercial public auction or an online auction website.

Money raised by selling donated goods like clothes does not qualify for Gift Aid. You need to explain to owners of donated items that the shop, auction or website will act as their ‘agent’ to sell goods on their behalf if the owner will give the sale proceeds (minus any commission charged) to the charity as Gift Aid donation.

If you operate a charity shop, staff and volunteers must explain the arrangements before donors complete a form appointing you as their agent.

The owner has the right to keep all the proceeds from the sale of their goods. They can choose to donate all or part of the amount. You can claim Gift Aid on the agreed amount after any commission (including VAT) has been deducted.

The owners of donated goods will usually make a Gift Aid declaration when they ‘sign up’ for the scheme, before you sell their goods."

From https://www.gov.uk/guidance/gift-aid-what-donations-charities-and-cascs-can-claim-on

What this means is that the timing of the gift is the point at which you confirm to the charity that you wish to donate the sale proceeds of the goods donated, not when the goods are given, or even when the goods are sold, and you have to have signed up to Gift Aid with the charity in advance. In certain circumstances you can carry back a gift aid payment in to the previous tax year, but only before the tax return for that previous year is submitted. An example here:

"Mr Purple was a higher rate taxpayer in 2021/22. In 2022/23 he decides to cut back his work to spend more time with his grandchildren, so will only be a basic-rate taxpayer.

On 15 June 2022 (in the 2022/23 tax year), Mr Purple gives £100 to Unicef. They will claim 20% from the government to make his donation £125.

Mr Purple can put the £100 donation in his tax return for 2021/22 which is due by 31 January 2023. This will trigger a refund of £25 (the difference between the 20% tax relief given by the government and the 40% he is due to pay because he was a 40% taxpayer in 2021/22).

If Mr Purple submits his tax return for 2021/22 by the 31 January 2023 deadline, but only remembers about the 15 June 2022 payment to Unicef after submitting the return, he cannot submit an amended return to trigger the refund. Similarly, no carry back claims can be made in respect of any other donations made in the 2022/23 tax year but after 31 January 2023."

From: https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/giving-charity