Charitable gifts and section 24

by Readers Question

12:57 PM, 8th May 2017
About 2 years ago

Charitable gifts and section 24

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Charitable gifts and section 24

If you are a higher rate taxpayer, then you get money back. E.g. if you give £100, then the charity can claim gift aid of £25 (which assumes you are a 20% tax payer) and if you pay 40% tax, you get another £25 back (see https://www.gov.uk/donating-to-charity/gift-aid )

On my tax returns charitable gifts increase my basic rate, e.g. on my last tax calculation it said:
Your basic rate limit has been increased by £ XX to £31,785 + XX for Gift Aid payments

So if my charitable giving XX was £10,000, I get £2500 back.

In 2017/2018 will I also get to use this new basic rate for my section 24 calculation on interest?

Depending a bit on my income, this could be quite a valuable additional incentive.

Many thanks

David



Comments

Neil Patterson

12:58 PM, 8th May 2017
About 2 years ago

Good question David and not one we have run across before so I am hoping someone can help.

PaulM

13:32 PM, 8th May 2017
About 2 years ago

The section 24 impact just effectively increases your earnings. The charitable gifting gives you an extra allowance on your taxable earnings, so yes, it will work.

I've done it for years now. It benefits both the charity and yourself and gives the added bonus of feeling good about doing it as well. You will have to give a sizeable amount to make a decent difference though and it's especially useful if you're getting close to the next tax-band threshold.

As Tony Robbins says "The Secret to Living is Giving"

David Mensah

13:47 PM, 8th May 2017
About 2 years ago

Reply to the comment left by "Paul Mullally" at "08/05/2017 - 13:32":

thanks Paul -- just making sure I understand, you are saying we can get a double benefit now with section 24 because my basic rate has gone up.


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