Another stupid question

[DimPrawn]

Has this happened to you Dim?

No.

I'm not a 50% tax rate payer.

[Doggy Styles]

Has this happened to you Dim?

[MrRobin]

donation -------- 50000
incl. gift aid ------ 62500
tax credit -------- 18750
Hector keeps ----- 18750

IANAA

[DimPrawn]

You can only claim the difference in rate (i.e. 50% - 20% = 30%) of the gross amount that the charity receives (£60k)

£60k * 30% = £18k

Tax relief when giving to charity through Gift Aid : Directgov - Money, tax and benefits

Perhaps a better question is:

Given a £100K bonus gets paid to a 50% tax rate payer, and the said person gives the net bonus to charity and then declares the amount donated on their tax return, how much does the charity receive (after gift aid), how much to you receive and how much does the tax man keep?

[MrRobin]

You can only claim the difference in rate (i.e. 50% - 20% = 30%) of the gross amount that the charity receives (£60k)

£60k * 30% = £18k

http://www.direct.gov.uk/en/MoneyTax...rity/DG_078490

[DimPrawn]

50% tax rate payers.

If a 50% tax rate payer received (say for instance) a £100K bonus, the tax man would take £50K in tax and the poor permie would be left with £50K.

The permie now donates the £50K to charity and under the gift aid scheme, the charity claims back about 20% direct from HMRC.

So charity now has £60K, the tax man has £40K and you have none.

If you then put this onto your tax return, does the remaining £40K go to the charity or do you receive this as an offset to the tax you owe?

If it goes to offset the tax you owe, your £100K has benefitted you by £40K and the charity by £60K and the tax man has got nothing from your bonus?

Can anyone please let me know if I'm on the right track?