Other tax effective issues:

Higher rate tax payers /
Giving through the tax return

See below for Giving through the tax return

Higher rate tax payers

The church can only claim back tax under Gift Aid at the basic rate, currently 22%, no matter at what rate the donor pays tax. If the donor pays the higher rate of tax, they can recover the difference in tax directly from HMRC (formerly Inland Revenue), usually from their Self Assessment tax return. At the time of writing, the higher rate taxpayer pays tax at 40%, the church reclaims at 22%, and the donor can reclaim the 18% back from HMRC.

For example, a donation of £78 is worth £100 to the church after recovery of tax at the basic rate. The higher rate tax payer can obtain a further £18 tax back, reducing the cost to them to £60.

While it may be beneficial to offer an explanation of this, as an incentive to higher rate taxpayers to increase their Gift Aided giving accordingly, it would be unwise to assume that any particular individual is necessarily a higher rate tax payer, and has not already taken this personal tax relief into account in deciding how much to give.

Giving through the Tax Return

In 2003, an additional way for some people to give to charity was announced, taking effect from April 2004. In the UK, 3 million people have to complete a Self Assessment (SA) tax return. From April 2004, those who are due a repayment of tax from HMRC can choose to nominate a charity to receive the money, via their SA return, instead of receiving it themselves. In addition to this, they can choose to Gift Aid the repayment via an option their SA return. If wished, the donor can do this anonymously.

The charity will receive the money directly into their bank account. If the donor has chosen to Gift Aid the repayment, the tax will also be paid over automatically into the charity’s bank account.

HMRC publishes a list of participating charities from which donors can choose. To be included on the list, each parish needs to complete a form with the required details, including bank account information.

The Published list will display your parish name, plus an alternative name for your parish/charity if it is known to donors by another name. Your parish is allocated a code (not theHMRC reference number) which will be used by HMRC and donors.

Parishes on the Diocesan Scheme will have received forms from Church House for inclusion on the list. Other parishes should have heard directly from HMRC. If your parish has not yet registered on the list, HMRC will accept applications at any time, and your parish would be included on the next published list, usually reviewed annually.