Self-Assessment Giving

What is Self Assessment?

Most people have their tax automatically deducted from their earnings or pensions through PAYE (Pay As You Earn).

However, income that is not taxed through PAYE, such as property or investments above a certain amount, or people that are not on PAYE, such as the self employed, have to account for this income through Self Assessment. Higher rate taxpayers are usually required to complete a self-assessment return for each tax year.

Through Self Assessment, taxpayers can reclaim any tax benefits from Gift Aid and make further donations to charity. Individuals can also choose to donate any tax repaid to them by HM Revenue and Customs (HMRC) to charity. To benefit fully from this, ensure your charity is eligible for donations by obtaining your unique code from HMRC and promoting this to your donors.

Gift Aid

If a donor pays tax at the higher rate of income tax (currently 40%) they can also claim tax relief for themselves at 20% of their gross donation, or 25p for every £1 they give through Gift Aid. 20% is the difference between the basic rate of income tax (20%) and the higher rate (40%).

The Provision of Transitional Relief does not affect the amount the donor can reclaim as it is a separate relief.

This tax relief can be claimed by entering the donation in the Gift Aid section of their Self Assessment tax return.

Alternatively, some donors may receive a Tax Review form (P810) on which they can make a claim or the donor can get in touch with the tax office that handles their affairs. Claims can be dealt with over the telephone.

Donating tax repayments to charity via Self Assessment

When completing a first version of a Self Assessment tax return, a donor may nominate a charity to receive all, or part, of their repayment.

The standard tax return form is now called the SA100 and is available online or as a paper version. There is also a short version available called the SA200 which is available to certain individuals in paper version.

HMRC have also introduced the SA100 Charity . This form allows the donor to tick a box that states they want any tax rebate (or a part of it) to go to a single charity of their choice. This can be done anonymously if preferred. You can see a sample form here: http://www.hmrc.gov.uk/forms/sa100-charity.pdf

If the donor does not complete a self-assessment form, the donor can contact their local tax office and reclaim the donation using the P810 form.

Eligibility for Self Assessment Donations

Charities need to ascertain a unique SA Donate reference number from HMRC that the donor enters onto the SA100 Charity form. To get SA Donate number, write to HMRC or complete their model form: http://www.hmrc.gov.uk/charities/charity_flyer_4.pdf

Donors can find charity reference numbers here: www.hmrc.gov.uk/charities/charities-search.htm or by contacting the HMRC via telephone. However, it would be advisable to supply your donors with this number to make the process simpler and encourage more donations to your charity. The easier the process is for the donor; the more likely they are to donate.

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Promoting Self Assessment Giving

In order to benefit from Self Assessment Giving it is essential that your charity is registered with HMRC and promotes this method of giving to your donors.

Use the template article to highlight this method of giving to your charity.

Self Assessment Giving Template Article. Tailor this article to your charity and include it in your next newsletter to donors.