At the same time, it is also worth noting that you do not necessarily have to be working to be paying tax. Apart from tax on income from a job or self-employment, the tax you have paid could include:
Tax deducted from savings income or interest. The tax-free personal savings allowance of £1,000 (£500 for higher-rate taxpayers) for savings income or interest was introduced from 6 April 2016. This means most people no longer pay tax on savings interest because banks and building societies no longer deduct tax from interest they pay on their savings accounts. However, donors who have savings income or interest in excess of £1,000 [£500 for higher-rate taxpayers] will have to pay some tax that can be used to cover Gift Aid donations.
Tax on state pension and/or other pensions depending on overall income level.
Tax on investment or rental income. The introduction of the dividend allowance on 6 April 2016 means that individuals do not pay tax on the first £5,000 of their income from dividends paid by companies that they own shares in. This means that donors that have paid tax on dividend income over the £5,000 allowance will have some tax that can be used to cover their gift aid donations.
Capital gains tax paid on gains. Other taxes such as VAT and Council tax do not qualify, nor does any non-UK tax.
Self assessment
If you are a basic-rate taxpayer, gift aid only applies to the basic rate of income tax (20 per cent). However, if you pay a higher rate of income tax, you will have paid 40 per cent or 45 per cent. If this is the case you can claim the difference between the basic rate of tax and your highest rate on your self assessment form if you make a gift aid donation. For higher-rate taxpayers on £10 that's another £2.50 and for additional rate taxpayers it's a further £3.12, so additional-rate taxpayers and their chosen charity can receive a total between them of £5.62 back from HMRC for a donation of £10 – 56.2 per cent on top of the original donation.
There is no minimum or maximum payment with the gift aid scheme. George Osborne did try and introduce a limit to charitable giving that is available with tax relief in his 2012 Budget, but subsequently back-tracked on this.
Donations can be carried back to the previous tax year (perhaps to take advantage of a higher tax payment in the previous tax year) provided a carry-back claim is made no later than the date the donor submits his or her tax return and in any event no later than the filing deadline, which is 31 October if you file a paper tax return or 31 January if you file online. If you do not complete a tax return you can ask your tax office to send you a form P810 tax review – you must send this by no later than 31 January after the end of the tax year to which you wish to backdate your gift. But if you have already sent back your tax return you can only ask for the donation to be treated as Gift Aid for the current tax year. You can not change a tax return to carry back a donation.
