If you're one of the people sufficiently blessed by the Lord to have earnings in excess of £43,000 - or even £150,000... please read on.
The introduction of the 50% top rate of tax from 6th April 2010 (reduced to 45% from 6th April 2013) meant that your potential reclaim of personal tax based on a Gift-Aided donation is even more than it used to be before 2010. For a gift of £1000, it makes the difference between a £250 and £312.50 refund for you.
If none of that makes any sense, start by reading the paragraphs below.
On top of all the advantages of Gift Aid reclaims by churches, based on traceable giving by Basic-Rate taxpayers, there are even more possibilities for those wealthy enough to be paying Higher-rate tax.
In the current tax year 2018-19, that means all those earning more than £46,350 (taking the Personal Allowance into account). A rate of 40% (instead of 20% Basic Rate ) applies to all income above that level and up to £150,000. There are slightly different provisions for those born before April 1948, i.e. aged over 68 now.
Above earnings of £150,000, a top tax rate of 45% now applies, and people earning at that level will have no Personal Allowance (we can't go into it in much depth but it's phased out for earnings over £100,000, expiring at around the £118,800 level....)
In brief... Higher-rate taxpayers donating to their churches (or any charity) can claim some personal tax refund back for themselves. This is because of the difference between the Church claiming Gift Aid refunds back at the Basic Rate, and the taxpayer having paid at the Higher rate. This personal refund can be worth £250 for every £1000 donated by a 40% taxpayer, and £312.50 for every £1000 donated by a 45% taxpayer.
Official figures from the Revenue and the charitable sector suggest that half of higher-rate taxpayers apparently do not realise this - or even if they do, they don't bother to claim. In fact, as a result of this inertia, the Revenue withdrew, from April 2012, a facility for higher-rate taxpayers completing their self-assessment returns, to nominate any refunds due to them for payment direct to their chosen charity.
If you are entitled to a refund but have no personal need of it - please take the trouble to claim it and pass it on to your parish. As a separate Gift-Aidable donation, that refund can itself attract a top-up at the 20% rate.
This is just the briefest of summaries. More detail, and worked examples, are available on request from Majella Meehan.
Back to main Gift Aid page...