About Gift Aid donations (Basic Rate Tax Payer)

Mum161111

If anyone can confirm that my understanding of Gift Aid is right enough I'll be reassured, thank you. 

If, for example for a basic rate tax payer, a charity Gift Aid donation amounting to  £1.250 for the tax year 2023-2024 is made, is it right enough that the additional 25% of this (which the charity receives) has to be 'covered' by the PAYE tax paid?  

Does it mean that, as long as Income Tax of at least  £312.50 is paid in the same tax year, the amount donated to the charity will be "covered" for the charity to receive the tax (25%) in addition to the £1250 donated?

Dazed_and_C0nfused

Mum161111 said:

If anyone can confirm that my understanding of Gift Aid is right enough I'll be reassured, thank you. 

If, for example for a basic rate tax payer, a charity Gift Aid donation amounting to  £1.250 for the tax year 2023-2024 is made, is it right enough that the additional 25% of this (which the charity receives) has to be 'covered' by the PAYE tax paid?  

Does it mean that, as long as Income Tax of at least  £312.50 is paid in the same tax year, the amount donated to the charity will be "covered" for the charity to receive the tax (25%) in addition to the £1250 donated?

Basically yes, it's the tax liability which counts so if that is £312.50 then there would be no adjustment needed to collect additional tax to cover the basic rate Gift Aid tax relief.

You might not actually pay the £312.50 until later this month (if you are filing a Self Assessment return).

Mum161111

That is reassuring, thanks Dazed_and_COnfused.  With help, because I could not get the on line Self Assessment form  to accept the information I was trying to include, I submitted my Self Assessment Form by post and paid the amount requested last Friday, 10th Jamuary.

On my Self Assessment form I added my Gift Aid donation details (in the blank space for other information)  and hoped that I had paid enough tax for the year 2023-2024 to cover my Gift Aid donation.

I had to pay to cover unpaid tax on my income from completing Prolific Surveys.  Hopefully I am up-to-date now.  I found it quite stressful because this is the first time I have had to complete Self Assessment as it has always, until now, been PAYE.  
  
I'll be more prepared for the next Self Assessment for the tax year 2024-2025.

I appreciate your quick and reassuring reply, thank you Dazed_and_COnfused.

Dazed_and_C0nfused

If you hadn't been charged sufficient tax to cover the Gift Aid tax relief I think the Self Assessment calculation automatically adds an extra tax charge so you end up paying sufficient tax to cover the Gift Aid tax relief.

Tax due on your normal PAYE income allowance counts towards the Gift Aid element.

Mum161111

Thanks very much for explaining, Dazed_and_COnfused.  I was concerned in case the charity would have to return some of the 25% if I had not paid enough tax to cover it.  It sounds as if it will be all right.  Thank yiou,  again, and I really appreciate your replies.

Dazed_and_C0nfused

Mum161111 said:

Thanks very much for explaining, Dazed_and_Confused.  I was concerned in case the charity would have to return some of the 25% if I had not paid enough tax to cover it.  It sounds as if it will be all right.  Thank yiou,  again, and I really appreciate your replies.

I don't think the charity is ever impacted, as far as I'm aware the tax liability would always fall on you.

Nomunnofun1

Dazed_and_C0nfused said:

Mum161111 said:

Thanks very much for explaining, Dazed_and_Confused.  I was concerned in case the charity would have to return some of the 25% if I had not paid enough tax to cover it.  It sounds as if it will be all right.  Thank yiou,  again, and I really appreciate your replies.

I don't think the charity is ever impacted, as far as I'm aware the tax liability would always fall on you.

No it won’t be. You are also probably too young to remember calculating tax using the total income method which would recover gift aid contributions where the tax relief was not ‘covered’ by the taxpayer.