Barry Flood wrote:
swansonj wrote:Could someone who is an expert in tax please confirm if this is true or not? I have never heard before of the option of the individual making a donation reclaiming the basic rate tax. I thought the system was that the charity (and only the charity) could reclaim the basic rate taz and the individual could reclaim any higher rate tax. I thought subsricptions were only tax deductible if to a professional organisation necessary for your trade.
I hate to admit this in public but I was an Inspector of Taxes. In answer to several points I see discussed in the forum, this is how Gift Aid worksFirst you must pay UK tax
. Second is the gain to the CTC.
Gift Aid donations, i.e. subscriptions if we become a unified charity, are regarded as having basic rate tax deducted by the member. The CTC would take your donation - which is money you've already paid tax on - and reclaim the basic rate tax from HM Revenue & Customs on its 'gross' equivalent - the amount before basic rate tax was deducted.
Basic rate tax is 20 per cent, so this means that if your full CTC subscription is, say £36, then using Gift Aid, it’s worth £45 to the CTC, so we get an additional £9 for every member paying a full sub of £36.Third is the gain to a higher rate taxpayer personally, (and is separate and additional to the gain to the CTC described above).
If you pay higher rate tax, you can claim the difference between the higher rate of tax 40 and/or 50 per cent and the basic rate of tax 20 per cent on the total 'gross' value of your subscription to the CTC.
For example, if your subscription is £36, the total value of your subscription to the CTC is £45 - so you personally can claim back:
• £9 - if you pay tax at 40 per cent (£45 × 20%)
• £13.50 - if you pay tax at 50 per cent (£45 × 20%) plus (£45 × 10%)
You can make this claim on your Self Assessment tax return.
Hope this helps.