Self Assessment and Charitable Donations

MIZZ12

Hi, I am filing a Self Assessment for the first time (2023 24) and am in the higher tax bracket for that year although in previous years I was a basic rate tax payer.  My question is whether I can carry forward tax relief from charitable donations made in previous tax years (prior to 23/24) to offset against my higher rate income in 23/24?  Secondly, would I then be able to also carry back gift aid donations made in the current tax year if I am now a basic rate tax payer in 2024/25?  Many thanks!

[Deleted User]

First part - No - no carry forward. 

Second part - Yes but ONLY if the contributions made in 2024/25 are made between 6th April 2024 and the date you file the return (must be before 31st January 2025). Once you have filed the return 2024/25 contributions made subsequently cannot be carried back. 

MIZZ12

Thanks Ferro.  If I have a monthly standing order making charitable donations,  am I able to include all the months payments I would have made by the end of the tax year ? (Presumably not!). And what happens when I come to do next year's self assessment with regards to these donations,  do I include all those made during 24/25 including the portion of donations I have carried back to the previous tax year?  Thanks so much!

[Deleted User]

MIZZ12 said:

Thanks Ferro.  If I have a monthly standing order making charitable donations,  am I able to include all the months payments I would have made by the end of the tax year ? (Presumably not!). And what happens when I come to do next year's self assessment with regards to these donations,  do I include all those made during 24/25 including the portion of donations I have carried back to the previous tax year?  Thanks so much!

First point - not 100% sure but I would tend to agree with you. 

Second point - there will be a box which states something like ‘payments made in 2024/25 but treated as paid in 2023/24’ - that’s where to enter the carried back payments. 

MIZZ12

Ah great thanks very much for that!  Super helpful. 

MetaPhysical

Supplementary question please?  I am also an higher rate tax payer.

I give £100 to charity.  They then use charity aid to claim the tax at the basic rate what I would have paid on that £100.

What do I put on my tax return?  £120 or £140 ??

Dazed_and_C0nfused

Neither, £125.

Bookworm105

MetaPhysical said:

I give £100 to charity.  They then use charity aid to claim the tax at the basic rate what I would have paid on that £100.

What do I put on my tax return?  £120 or £140 ??

your £100 is paid from your post tax income, so the charity grosses it UP to receive the full 100% ie, including 20% basic rate tax relief
 
the maths is the £100 is equivalent to 80% of the pre tax amount paid
so 1% = £100 / 80 = £1.25
and £1.25 x 100% = £125 gross (pre tax) paid 


(consider it the other way, if you were earn £120 gross then you would pay £24 in tax (120 x 20%) not £20)

[Deleted User]

Dazed_and_C0nfused said:

Neither, £125.

I never like to doubt you but you actually enter £100. This is subsequently grossed up on the calculation - ‘your basic rate band has been extended by £125’

I have just checked this on a return that I am currently submitting. 

Dazed_and_C0nfused

[Deleted User] said:

Dazed_and_C0nfused said:

Neither, £125.

I never like to doubt you but you actually enter £100. This is subsequently grossed up on the calculation - ‘your basic rate band has been extended by £125’

I have just checked this on a return that I am currently submitting. 

Good point, perfect example of more haste less speed 😠

[Deleted User]

Dazed_and_C0nfused said:

[Deleted User] said:

Dazed_and_C0nfused said:

Neither, £125.

I never like to doubt you but you actually enter £100. This is subsequently grossed up on the calculation - ‘your basic rate band has been extended by £125’

I have just checked this on a return that I am currently submitting. 

Good point, perfect example of more haste less speed 😠

If you’re old enough to remember it has something to do with the tax retained on charges in the total income method to ensure that, in this case, £25 tax has been paid by the donor.