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Hits and myths
Key points
- The gift aid scheme enables charities to reclaim tax treated as paid on a donation.
- Gift aid donors who have not paid an equivalent amount are liable to pay any difference.
- A £9 000 tax liability was insufficient to cover a gift aid liability of £7 000.
- Some income tax liabilities are not taken into account for gift aid purposes.
- The accrued income scheme may result in unexpected liabilities for transfer between spouses or civil partners.
Most Taxation readers will be familiar with the basic principles underpinning the gift aid scheme. A gift aid donation is treated as made after the deduction of basic rate income tax. Generally the recipient charity will not be subject to tax on most types of income as long as it uses those funds for charitable purposes. Consequently it can claim back tax that has been deducted from that income ...
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