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Are You Eligible for Higher Rate Tax Relief?

Photo of Kevin Russell Kevin Russell
2 min

Gift Aid donors who pay tax at the higher (40%), or additional (45%) rate of income tax can claim a personal repayment of tax from HMRC, equal to the difference between their highest rate of income tax and the basic rate of tax.

It seems that there are quite a few people who either do not know that they can claim this, or think that it is too complicated.

And yet, all it takes for PAYE taxpayers is a telephone call to your tax office!


Fred is employed and earns £50,000 p.a. He therefore pays income tax under PAYE, at 40%. He decides to give £4,000 p.a. into a Stewardship giving account – on which Stewardship reclaims £1,000 under the Gift Aid Scheme, into his account. He therefore now has £5,000[1] in the account, over which he can make gift requests to benefit his church and his other favourite charitable causes.

Fred’s gift of £4,000 is a net gift for tax purposes. Stewardship reclaims £1,000 of basic rate tax already paid by Fred, making the gross gift value up to £5,000.

Fred is therefore allowed total tax relief of 40% on the gross gift (£5,000) which comes to £2,000. But Stewardship has already claimed £1,000 of this. Therefore Fred can personally reclaim the other £1,000:

Total tax repayments due: £2,000

Repaid into the Stewardship Giving Account: £1,000

Now repayable to Fred: £1,000


How to claim your personal repayment

Fred simply needs to telephone his usual Tax Office and tell them about the gift(s). They will need a few personal details in order to adjust the right person’s tax record but that is all – job done!

Self employed taxpayers can also claim. They simply need to fill in the relevant boxes for charitable giving when completing their usual self assessment tax return and the repayment will be factored into their overall tax calculation.

You can stretch your charitable giving!

Once you have your repayment, why not consider giving some, or all of it, to charity as well? And if you also do that under Gift Aid, it will generate a further repayment[2]

Of course, the examples above work whether the charitable gift is to Stewardship, or to any other charity.


[1] For the purposes of this example, this ignores the membership deduction made by Stewardship.

[2] Assuming that you are still a higher rate taxpayer.

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Written by

Kevin Russell

Kevin is one of Stewardship’s leading team of technical experts with over 25 years of experience of helping churches and Christian charities maximise their potential. His expertise and knowledge is sought not only by charitable organisations but by Government, the Charity Commission and HMRC, helping to solve complex tax and charity law problems.

Prior to working for Stewardship, Kevin had a wide range of business, charity and teaching experience and is a qualified chartered accountant, and a chartered tax advisor. At PwC he was a Senior Tax Consultant assisting medium and large businesses in all aspects of their tax affairs. Also a lecturer in the Business School at Middlesex University and Principal of his own Chartered Accountancy practice.

Kevin is Vice Chair of the Charity Tax Group and Chair of CTG’s Gift Aid & Giving Technical Group. He represents the Christian church on HMRC’s Charity Tax Forum and advocate for the sector to Government, the Charity Commission and HMRC.

Currently a trustee of the UK arm of an international charity that inspires people to discover Jesus for themselves. Past roles include church deacon, trustee and auditor and he has helped set up two church plants.

Kevin and his wife Carol have 3 adult children and one grandchild.  They attend Grace Church, Highlands in North London.

Causes close to Kevin and Carol’s hearts are those working directly with the homeless, with drug addicts, and women in prostitution. Organisations working in evangelism amongst young people, in family life and demonstrating Christian love in action in the public sphere.


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