Charitable Gifting
Limits
There are limits to the amount of gift aid that can be claimed by the charity and you could face a tax charge if the Gift Aid relief exceeds the UK tax you have paid during the tax year. You will need to have paid sufficient income or capital gains tax in the UK for a charity to claim the additional 25% of the donation. A simple rule to confirm your donations will qualify is to ensure they are not more than 4 times what you have paid in tax in that tax year (income or capital gains).
Example: Dave will pay income tax of £2,500 for the 2020/21 tax year. He can, therefore, be comfortable that following a gift of £10,000 to Cancer Research UK the charity can claim full gift aid on his contribution. Anything over this gift amount cannot be claimed as gift aid.
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Benefits for higher and additional rate tax payers
An additional benefit to individuals who pay tax at the higher and additional rate, is that you can claim further tax relief against your own income tax liabilities through your self-assessment return. This is the difference between the respective rate of tax at 40% or 45% and the basic rate at 20%.