If you are feeling charitable, remember that a donation to charity under the Gift Aid scheme benefits from tax relief.
A donation you make to a charity under Gift Aid is treated as if you had deducted basic rate tax before you made the payment. So, for example, a payment of £80 is treated as a gift of £100 less tax at 20%, and the charity can reclaim the £20 from HMRC. If you are a basic rate taxpayer there is no more to consider, but if you are a 40% or 45% taxpayer you are entitled to tax relief at your marginal rate for the £100 gift. So, a total amount received by the charity of £100 costs a basic rate taxpayer £80, a 40% taxpayer £60 and a 45% taxpayer £55.
You must complete a Gift Aid declaration that includes your full name, your home address, the name of the charity, and the details of the donations that the declaration relates to. It must also state that the donation is being made under the Gift Aid scheme.
You cannot carry gifts forward, but you can carry them back to the tax year before you actually made them, provided you paid enough tax in that year to cover the basic rate tax both on the gifts for that year and on the gifts carried back. Depending on your circumstances, this might give you tax relief at a higher or lower rate. Your request to carry gifts back must be made to HMRC before or at the same time as you submit your tax return for the earlier year, and no later than the filing deadline, i.e. 31 October after the year-end for a paper return and 31 January after the year-end for an electronic return.
Be aware, though, that when you make your Gift Aid declaration, you are saying that you will have paid enough tax for the tax year to cover the relief that the charity is claiming. If you don’t pay that much tax, then you must make good the charity’s relief to HMRC.