Donations made under Gift Aid are made net of basic rate tax. This means that for every D1 you donate, the charity can recover 25p from HMRC. Furthermore, if you are paying tax at the 40% rate, you can claim further tax relief of 25p. Consequently, at a net cost to you of only 75p, the charity receives D1.25 – or, for a net cost to you of D100, your donation is worth nearly D167 to charity. If you are a 45% taxpayer, the additional tax reclaimed is 31.25p making a donation costing D100, net worth D182 to the charity.
A payment made in the current tax year can, subject to certain deadlines, be treated for tax purposes as if it had been made in 2016, provided you have not yet submitted your tax return. This may not be important to many people, but if you paid higher or additional rate tax in 2016 and expect to be in a lower rate band this year, a claim will allow you to obtain relief at last year’s, higher rate. The application must be made on an original tax return, not on an amended return.